The US dollar index closed moderately higher again today, reacting further off of recent lows of the short-term downtrend from late May. Both cycle analysis price oscillators have experienced bullish crossovers and a bullish engulf pattern formed on the daily chart today, generating a cycle low signal. We have been expecting the formation of a Short-Term Cycle Low (STCL) and today's move higher confirms that it occurred on June 7.
Normally, we would require additional follow-through after the generation of a cycle low signal in order to confirm the formation of a low, but the magnitude of the rebound, coupled with the advanced age of the cycle from early May, indicates that the latest STCL is in place. Looking ahead, the character of the developing alpha phase rally will provide the next assessment of long-term downtrend health.
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