Cycle Trading

Thursday saw the dollar follow through to the downside.

The dollar had been trading in a range for almost 2 weeks. The dollar peaked on day 16 and formed a swing low on day 17. But lacked downside follow through until today. The decline was halted by the rising daily cycle trend line. A break below that confirms the daily cycle decline.

At day 21 the dollar is already in the timing band for a daily cycle low. So once the dollar breaks below the daily cycle trend line, swing low could very well likely mark the daily cycle low.

Stocks have not shown any follow through since a swing low was formed on day 25. Stocks are forming a mini consolidation. Since stocks will enter the timing band for a daily cycle low tomorrow I think that we are likely to see some follow though to the downside. If stocks have a bullish breakout and break above the day 24 high, then we would be forced to recognize day 25 as a daily cycle low.

We see that gold delivered a bullish follow through today.

Thursday was day 7 for gold’s daily cycle. Gold had been testing the 1400 resistance level for the past 7 sessions and finally broke through today. Since the previous daily cycle formed as a right translated cycle our expectation is for this cycle to break above the previous cycle high of 1487.8

The Miners also delivered a bullish follow through today.

Thursday was day 7 for the daily Miner cycle. For over the past 6 weeks the 270 level has acted as support/resistance. The Miners were up of 5% today and finally closed above that support/resistance level.

In fact the Miners were up so much today that they formed a weekly swing low.

The Miners have been in a downtrend since late September. The Miners likely formed a yearly cycle low last week. Forming a weekly swing low is an important initial confirmation that the yearly low is behind us.

So little, by little our bullish framework is coming together …