Cycle Trading

So is it safe to go back in the water?

If you are looking for safety then we need to look at the yearly cycle.

Gold has been caught in the grip of a severe yearly cycle decline. Only a monthly swing low and declining yearly cycle trend line break would declare a new yearly cycle.

So if you are looking for safety then you may need to wait. Gold currently sits about 231 points below forming a monthly swing low. Also if you look at the previous yearly cycle low you will notice that it took gold 3 months to form a monthly swing low.

So maybe you don’t want to wait for a monthly swing low and yearly declining trend line break, well then lets look at the weekly chart.

Following the same line of thinking we see that gold is about 123 points south of a weekly swing low. But to get a declining weekly trend line break gold would still need to get in the neighborhood of 1600.

Settling for a weekly swing low and no trend line break is a bit riskier. A reasonable stop would be below the weekly candle 1321.5, which is 174 points south of forming a weekly swing low.

What does it look like from a daily cycle?

The trouble with a daily cycle is that we will not know if this is will be a right or left translated daily cycle. But because Tuesday gold printed a more narrow range candle than on Monday, it has eased the parameters to form a daily swing low. Also the daily cycle currently stands at day 38. The odds are likely that a swing low will (finally) mark the daily cycle low.

Gold needs to break above 1402.7 to form a daily swing low. Even after a daily swing low forms gold appears to by about 150 points away from a declining trend line break. Even if you disregarded the declining trend line just focused on the daily swing low, a stop placed below Tuesday’s candle of 1321.5 is still about 81 points south of Tuesday’s close.

Maybe the best thing to do is let this first daily cycle print and then look to get in at the second daily cycle low …

On to the dollar …

Tuesday was day 22 for the daily dollar cycle. The dollar is in the timing band for a daily cycle low. The dollar did break above the declining cycle trend line today. Break above Tuesday’s high of 82.51 forms a daily swing low and quite likely will mark a new daily cycle.

Once a new daily cycle begins, our expectation is for it to form as a left translated daily cycle which should peak on or before day 8.

Then the dollar should begin its intermediate cycle decline …

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