The dollar’s daily cycle peaked on January 26th. It printed it lowest point on Tuesday, breaking below both the 10 day MA and the daily cycle trend line to confirm the daily cycle decline. A break above 94.93 forms a swing low and delivers a trend line break signaling a new daily cycle.
The dollar did its best to obscure its daily cycle count. We considered that day 23 was a possible DCL, but the announcement of QE Euro negated that. Plus, the TSI did not verify a DCL on day 23 by breaking below the zero line.
A swing low will signal a new daily cycle. The dollar is due for an intermediate low so it is likely to see this new daily cycle form in a left translated manner and fail, leading to an intermediate cycle decline.
The daily equity cycle peaked on day 8, locking in a left translated nature to this daily cycle.
This was a volatile daily cycle that saw stocks lose the 50 day MA three times before finally printing a daily cycle low on Monday, day 31. Stocks went on to rally this week, breaking above the 50 day MA and the declining trend line.
The declining trend line is the same trend line for the intermediate cycle decline. The trend line break delivers a cyclical anomaly. A break of the declining intermediate trend line signals a new intermediate cycle but we have a left translated daily cycle that did not fail. If stocks go on to form a right translated daily cycle, that will confirm a new intermediate cycle.
As we discussed on Thursday night, there was a very similar set up back in 2005-06.
Both then and now:
* Both occurred during the second daily cycle.
* Both had a triangle consolidation that resulted in a left translated cycle that did not fail.
* Both occurred during week 16 of the intermediate cycle.
* Both delivered a declining intermediate trend line break signaling a new intermediate cycle.
Back in 2006, stocks went on to print an 18 week intermediate cycle.
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