Questions about the Dollar

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The dollar closed above the upper daily cycle band on Tuesday and delivered more bullish follow through on Thursday. This raises the question did day 14 host an early DCL?

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Many times a stretched daily cycle it is followed by a shortened one. So that would mean that the 39 day DCL was followed by a 14 day DCL, balancing out the cycles. Another reason why a day 14 DCL scenario is likely is that the alternative would mean that Thursday was day 34. The dollar’s daily cycle runs about 20 – 25 days, sometimes stretching up to 30 days. There is no precedent for the dollar’s daily cycle to stretch this far and continue to be printing new highs. But regardless of the daily cycle count, the dollar should be ready to roll over into a daily cycle decline.

The dollar has also begun closing above the upper daily cycle band to establish a daily uptrend. And closing above the upper daily cycle band is a signal that the dollar is in a new intermediate cycle. Which begs the question did week 15 host an early intermediate cycle low?

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First of all, I think that it is very unlikely that after beginning its intermediate cycle decline that a countertrend rally can regain a significant moving average like the 50 week MA. But the dollar is currently breaking above the 50 week MA. Secondly, if day 14 did host a DCL then the dollar is in its second daily cycle making higher highs and higher lows.

In the Weekend Report I plan to look closer at the dollar and how all of this affects the dollar’s yearly cycle and 3 year cycle.

Not much to say about gold except that once the dollar forms a swing high, then I expect gold to form its swing low and begin a new daily cycle.

So I want to comment on stocks. I cautioned in the Mid-Week Report that any weakness in stocks leading to a close below the lower daily cycle band could lead to something more sinister than a half cycle low. Stocks managed to print a gain on Thursday, but the 10 day MA has turned lower and there was also a huge Selling on Strength number for the SPY on Thursday. It is this type of huge SOS that is often associated with an intermediate cycle decline.

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