Cycle Trading

On Monday we discussed that the dollar may need to break below the 83 level to garner any interest from gold.

Well, the dollar did and gold seemed interested.

Thursday was day 22 for the dollar’s daily cycle.
Three things of interest:
1) The SCT broke below the 75 line.
2) The dollar breached the daily cycle trend line.
3) The dollar broke below the 83 level.

The Schaff Trend Cycle broke below the 75 line, which provides another level of confirmation that the dollar is seeking its daily cycle low. Over the past three years, the STC has failed to reach the 25 line only one time once the SCT crossed 75 line.

The dollar breached the daily cycle trend line.
With the daily cycle getting long in the tooth, a swing low now holds a good possibility of marking the daily cycle low.
A break above the declining cycle trend line would confirm a daily cycle bottom has printed.

The dollar also broke below the 83 level today.
83 has been a level of support, and now I expect the dollar to complete its move into its daily cycle low.

As previously mentioned, gold showed some interest that the dollar broke below the 83 level.

Gold’s daily cycle stands at day 15.
It is three days away from entering its timing band for printing a daily cycle low.
It also continues to get deeper into this triangle consolidation.
The fundamental driver to the gold bull market has been the devaluation of the dollar.

The dollar’s daily cycle can print a daily cycle low any day now and gold is a few days away from entering its own timing band to seek out a low.

Things seem to be getting dicey for gold. The framework suggests that the dollar could begin its new daily cycle just as gold enters its timing band for a low, which should pressure gold lower.

However, the good news is that the CRB continues to print higher highs.

As the dollar makes its final surge lower, the CRB appears to be making one more push higher. We also see the stair step pattern continue to emerge.

We will have to wait and see if (when) the CRB manages to help tip the scales in gold’s favor.