The dollar’s daily cycle peaked a week ago Friday on day 16. A swing high formed on Monday and the dollar continued lower through out the week.
Thursday was lowest point since the day 16 peak, stopping just short of printing a failed daily cycle. The dollar printed an inside day on Friday, easing the parameters of forming a swing low. A break above 79.65 forms a swing low and a break of the declining trend line confirms a new daily cycle.
Last week I commented here “generally speaking, surprises should confirm the trend. Meaning in an uptrend surprises should come to the upside and in a downtrend surprises should come to the downside. Stocks have been in an uptrend for the past 22 months. Friday’s print is a warning that this daily cycle can quickly develop into a failed daily cycle.”
Stocks went on to break below the day 35 low on Monday forming a failed daily cycle. A failed daily cycle signals an intermediate cycle decline. Stocks bounced off the 50 day MA on Tuesday and followed through higher on Wednesday. Thursday saw stocks reverse hard and giving up the gains from the previous two days and then some. In the process set the declining cycle trend line on Thursday. Friday saw stocks continue lower.
Friday was day 11 for the daily equity cycle. Since the timing band for a low begins on day 30, that gives stocks about another 4 weeks to trend lower.
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