Cycle Trading

The gold bull market began September 1999.

Gold bottomed in August, 1999.

After rallying over 33% in just two months, gold sold off and formed a double bottom in February of 2001

Since then …

Gold hasn’t looked back.

Along the way gold has printed some very impressive rallies.

From May, 2004 to May, 2006 gold gained 96.50%.
You will notice a 15 month consolidation following the large gain.

And from June, 2006 to March 2008 gold put in a 90.44 run.
Again following the big gain came a big consolidation of 18 months.

So both consolidations were fairly straight-forward.

Then from October 2008 to September 2011 gold printed a 181.22% rally.
That was the largest rally to date.
The following consolidation is turning out to be the most complicated yet.

It is a consolidation that played has out over two yearly cycles.

We are currently in the second yearly cycle of this consolidation.
February is month 9 of that yearly cycle.
Gold is in the timing band to form a yearly cycle low.
78% of gold’s yearly cycles print a low between 8 and 13 months.

Since February printed a lower monthly low, the earliest that gold can form a swing low is March.

Of course, in order to print a monthly swing low, gold needs to print a daily cycle low.

Gold broke down out of the mini triangle last Monday.
Gold did have a panic sell off on Friday.
Friday was day 14 for gold’s daily cycle.

While 14 days is a tad early, it is not out of the question that gold just may have printed its daily cycle low on Friday.
Breaking above 1635.90 forms a swing low.
A break above the declining grey trend line would signal a new daily cycle.
A break above the declining red trend line would confirm a new daily cycle and just possibly the beginning of the next leg up …