The dollar continue to develop bullishly this week. It closed above both the upper cycle band and the 50 day MA on Tuesday. And delivered more bullish follow through on Wednesday.
This is the first daily cycle of a new intermediate cycle. Our expectation is to see the dollar go on to form a right translated daily cycle. However, the dollar stumbled on Thursday and formed a swing high on Friday. While the dollar did close lower on Friday, it managed to close out the week above the 50 day MA and the daily cycle trend line. If the dollar loses the 50 day MA and closes below the daily cycle trend line that would signal trouble for the buck.
The daily equity cycle peaked on day 9. It formed a swing high as it broke lower, but found support at the 50 day MA. Stocks have since been contained by the 50 day MA and a declining trend line.
Friday was day 15 for the daily equity cycle. A bullish break out here would lead to the formation of a right translated daily cycle, extending the intermediate cycle. However, a close below the 50 day MA will likely lock in a left translated formation to this daily cycle which would lead to a failed daily cycle.
The banks have a similar set up. The True Strength Indicator did deliver a bearish zero line crossover on Friday which signals continued weakness.
The transports are already in a failed daily cycle, printing another lower low on Friday.
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