Cycle Trading

Gold delivered a reversal on Monday and formed a swing low on Tuesday.

While gold closed lower the swing low formed is another important step for gold. The next step will be for gold to close above the 1400 level. Following a close above the 1400 level is a break of the declining cycle trend line and then a close above the day 13 high of 1487.8 to form a higher high.

So gold printed what looks to be a daily cycle low on day 23, which is in the timing band for a low. A swing low formed as well as a mild Buying on Weakness print. These are all signals that the bottom is in.

It is not clear if the dollar has peaked yet.

It is day 14 on the daily cycle for the dollar.

Despite the bearish reversal on Tuesday the dollar seems to have found support at the 83.83 level. At this point the dollar can really go either way. The dollar needs to close below the 83.83 level to begin its journey into a daily cycle low.

On the other hand it looks like bonds may have printed their daily cycle low.

Last Tuesday bonds printed a reversal on strong volume only to see it turned back by the declining cycle trend line. Today bonds formed a double bottom and reversed higher. Tuesday was day 28 for the daily bond cycle. Bonds are deep in the timing band for a daily cycle low. A break above 117.87 forms a swing low and delivers a trend line break confirming a new daily cycle.

This is the second daily cycle for bonds for the current intermediate cycle. Since this is a failed daily cycle, its sets the expectation that the remaining daily cycles, for this intermediate cycle, will form as left translated daily cycles. If I were to guess, I would guess that bonds will have difficulty with the 200 MA this daily cycle and get turned back there.

GEtting back to gold. Gold does tend to begin its daily cycles timidly. If, in fact, the yearly cycle low has been left behind on April 16, then gold will begin to deliver some bullish surprises …