Dollar Bullish Reversal

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The dollar has been caught in a daily down trend that has been characterized by peaks occurring below the upper daily cycle band and lows forming below the lower daily cycle band.

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The dollar broke above the declining trend line in a clear and convincing manner last Wednesday to signal a new daily cycle. However the dollar formed a swing high last Friday and has drifted lower, until today.

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Last week was week 33 for the intermediate dollar cycle. This places the dollar deep in its timing band to print an intermediate cycle low. The developing bullish TSI divergence along with today’s bullish engulfing candle point towards the dollar leaving behind an intermediate cycle low last week. A close above the upper daily cycle band would signal that the dollar has begun a new intermediate cycle.

Meanwhile stocks formed a swing high today.

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Today was day 10 for the daily equity cycle. Since stocks have printed their intermediate cycle low in February stocks has had a series of minor pullbacks, in the range from 30 to 55 points. Stocks have been closing above the upper daily cycle band which indicates that stocks are in a daily uptrend. So even through stocks formed a swing high today, stocks should remain in a daily uptrend until they close below the lower daily cycle band.

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