Cycle Trading

As we discussed in the Weekend Report, gold printed a bullish reversal on Friday. As of the end of the day on Monday, gold has already rallied 6.88% off of Friday’s low. So the BIG question is — is the bottom finally in? A year from now, the answer to that question will seem obvious. But here in real time, we don’t know.

We saw in the Weekend Report that gold is in the timing band to form a daily, intermediate, and a yearly cycle low. What I want to do is walk you through the different levels of confirmation that I expect to see to verify that yes the bottom is in.

Step one is the daily swing low — check.
Monday gold followed the bullish reversal on Friday by forming a swing low.
This makes Monday potentially day 1 of a new daily cycle.

The next thing that we will be looking for is a trend line break to give us initial confirmation of a new daily cycle. Since gold has dropped so much that the first trend line that needs to be breached is the declining accelerated (gray) trend line. Final confirmation of a new daily cycle will be delivered with a break of the declining black trend line.

But before gold can breach the declining black trend line, gold will need to pass another “mile marker” first.

After a break of the accelerated trend line, gold’s next task would be to break above the 1301.30 level. By doing so gold will give an initial confirmation of a new intermediate cycle.

But, forming a weekly swing low does not give us final confirmation of a new daily cycle.

Final confirmation of a new daily cycle occurs with a break of the declining black trend line (currently around the 1340 level).

After a daily cycle trend line break the next “mile marker” is a break of the declining weekly trend line. A break above the declining weekly trend line delivers confirmation of a new intermediate cycle.

Once we have confirmation of a new intermediate cycle we next look for confirmation of a new yearly cycle. Initial confirmation occurs with gold breaking above 1423.60 forming a monthly swing low.

Final confirmation of a yearly cycle is delivered with a break of the declining monthly trend line.

Step 8 occurs when gold breaks above the 1802 resistance level.

Once gold breaks above the previous all time high of 1920.20 then gold will have established a new trend and the treasure will be waiting …