The dollar formed a swing low on Friday which may signal an extended daily cycle low has formed.
There are 2 reasons why I suspect an extended daily cycle.
1) The lower low has extended the intermediate cycle out to week 31. An extended daily cycle count becomes more likely than seeing the weekly cycle extend out by another 4 – 5 weeks.
2) The bullish TSI divergence indicates a possible bullish surprise.
The dollar will need to close above the lower daily cycle band to confirm that Friday was day 1 of a new daily cycle. And if Friday was day 1 of a new daily cycle, it will likely mark the beginning of a new intermediate cycle.
Stocks have done a masterful job this week masking its intentions. But it looks more and more like stocks printed a stealth 29 day, daily cycle low.
This week we discussed a possible stealth 29 day, daily cycle low. And then we also considered that the swing high that formed off of Wednesday may have signaled the daily cycle peak. But stocks breaking out to a new high on Friday has negated the swing high formed on Thursday. Which brings us back to a day 29 daily cycle low. Using our trend line tool we see that stocks peaked on day 27. Stocks formed a swing high on day 28 and broke below the daily cycle trend line to signal the daily cycle decline. Stocks then went on to print their lowest point on day 29. Aside from the shallow decline, that was a textbook example of a decline into a daily cycle low. Which makes Friday day 5 of a new daily cycle.
Stocks continue to close above the upper daily cycle band, indicating that stocks are in a daily uptrend. Stocks will remain in a daily uptrend until they close below the lower daily cycle band.
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