Cycle Trading

The dollar started to catch a bid mid way through today’s session that calls into question whether Friday was day 6 or day 28.

Should the dollar break above 83.02, it will form a swing low and strengthen the case for today being day 28.

A day 28 interpretation would explain why gold seemed so timid today while the dollar was selling off initially.
So lets see what a day 28 scenario means in the big picture.

A day 28 scenario means that the dollar is still in the third daily cycle of the current intermediate cycle. The intermediate cycle is 12 weeks old. A new daily cycle would take the current intermediate to between weeks 17 and 19.

That would suggest that the next daily cycle should be the terminal daily cycle to the current intermediate cycle with an expectation of a peak by day 8.

Week 12 saw the dollar tag the intermediate cycle trend line

A break of the rising trend line confirms an intermediate cycle decline.
If, in fact, the dollar is beginning a new daily cycle we could see one more push to a new cycle high. That would push out the weekly cycle printing a swing high by 2 more weeks.

The yearly cycle stands at 5 months.

The dollar printed a long upper shadow as it closed out the month.

If the dollar really is on day 6 of a new daily cycle, then the dollar is likely to continue to decline for at least the next 2 – 3 weeks. This would set up the August candle to form a swing high and possible begin its journey into a yearly cycle low.

A day 28 scenario will likely see the dollar print another higher monthly high.
That means that the earliest a monthly swing high could form would be in August.

Stocks

Equities had a big day on Friday posting a 1.91% gain on 93.46% of up volume on the NYSE. That is a very convincing follow through day.

Should equities break above the upper trend line, then that would confirm a new equity daily cycle.

But since there is a good possibility that the dollar is on day 28 and on the verge of a new rally, then we will need to be open to the possibility that stocks are on day 38.

Week 7 saw stocks close above the 1380 resistance level but was halted by the declining trend line. Equities need to break above this line to confirm a new yearly cycle.

Stocks formed a monthly swing low in July.
A break of the declining trend line is needed to confirm a new yearly cycle.

The 4 year cycle shows that equities are just about to wrap up month 40.
We need to start to be aware that with each passing month equities are getting closer to a decline into the 4 year low.
A 37 month peak assures us that the 4 year cycle will be right translated which should print a higher low once the 4 year decline has begun.

Gold

Gold broke through the declining trend line on Thursday and had a rather timid follow through day on Friday, day 4.

I would not be surprised to see gold back test the break out next week.

A break above 1630 forms a weekly swing low.

Gold’s consolidation has been dominating gold’s daily, weekly and yearly chart for some time now.

Again, we see a clear break out of consolidation.

It occurs to me that Gold already gave us one false break out.
It would be reassuring to see gold have a nice follow through next week.

Again we see gold’s consolidation pattern.
A bullish resolution would confirm a new yearly cycle.

Miners

Friday was day three for the daily HUI cycle.

The Miners gave us a bullish sign by being able to close above the 410 resistance level and leaving behind a bullish tail.

The intermediate cycle printed week 10 this week.
Now that the Miners have begun a new daily cycle the question becomes if (when) a weekly swing low is printed; does that mean next week is week 11 or week 1?

I have seen 12 week intermediate cycles on the HUI, but I do not recall a 10 week cycle.
But if gold is beginning a new intermediate cycle then it stands to reason that the Miners are as well.

So the Miners have begun a new daily cycle and could begin a new intermediate cycle next week. They are still waiting on confirmation that a new yearly cycle has begun.

The Miners appears to have printed a yearly low in May.
That was followed by a swing low printed in June.
July has reversed the swing low.
Perhaps that the Miners are beginning a new daily cycle along with gold’s bullish break out of consolidation, the Miners will break above the declining trend line to confirm a new yearly cycle as well.

The CRB

The CRB printed a daily cycle low on Wednesday making Friday day 2 if the new daily cycle.

We see that the CRB ran into resistance at the 300 level.
A possibility exists where the CRB is turn back and prints a lower low.
If that were to happen, then we would need to consider re-phasing the daily cycle low.

The CRB ran into the declining three year cycle trend line last week and was turned back by it this week.

With the dollar seemingly on the verge of a new daily cycle (day 28 scenario) then maybe the CRB will retreat. When the dollar’s cycle rolls over then we will likely see a surge through the declining trend line that would boldly declare a new three year cycle.

Bonds

Just like the dollar where it looked like a daily cycle low was printed last Thursday followed by a reversal candle today, Bonds also see a similar set up.

A break above 130.01 forms a swing low and quite likely a new daily cycle.

The weekly cycle just printed week 19.
The weekly cycle normally runs 12 – 22 weeks, so Bonds are in the timing band to print an intermediate cycle low.

The next swing high will likely mark the intermediate cycle decline.

The Yearly cycle stands at month 4.
Bonds still seem to be consolidating the recent rally.

Office Memo:
I will be out of the office next week and will not likely post a report until next weekend.

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