Cycle Trading

I know that it seems like Ground Hog Day. Another day, gold suffers another big drop.

Wednesday was day 25 for the daily gold cycle. While gold is getting in the later stages of its timing band, we need to keep in mind that the panic sell off in April saw the that daily cycle run long at 37 days.

The yearly gold cycle is on month 13. Gold cannot emerge from the yearly cycle decline until a monthly swing low forms. Since June printed a lower monthly low, the earliest a monthly swing low can form will be July.

Stocks had some follow through to the swing low that printed yesterday. Friday was day 45 and in the timing band for a daily cycle low. A break above the declining cycle trend line signals a new daily cycle.

Wednesday was day 5 for the dollar’s daily cycle. The dollar is approaching a resistance zone. Since the previous daily cycle failed our expectation is for the current daily cycle to form as a left translated daily cycle. If this cycle is to form as a left translated cycle, then I would expect the dollar to be turned back by this resistance zone. If the dollar powers through this resistance zone, then the likelihood of a left translated cycle forming falls. A rejection by this level should send the dollar into its yearly cycle decline.

We are waiting to see when the dollar resumes its yearly cycle decline if it allows gold to find its footing …