Cycle Trading

There were a number of signals last week that indicates the trend has changed and that precious metals are ready to rebound.

The first thing that I want to look at the a three year chart of the CRB Index.

The CRB Index has been caught in a severe decline since May of 2011.
In June 2012 the CRB printed a low of 266.78.
Now in June, 2013 the CRB printed a higher low of 275.54.

And then this week the CRB closed above the declining three year trend line. Of course we need to see follow through, but this is an important signal. This signals the cyclical bear on commodities is over and set the stage for an inflationary period.

I believe that the break of the declining trend line can be attributed to the three year dollar cycle topping.

The dollar printed a yearly cycle low in June. July saw the dollar form a swing low and then quickly reversed lower. August is month 2 and has already printed a monthly swing high. The yearly cycle appears to have peaked in one month. A break below the 80.49 level confirms the yearly cycle decline.

This is month 27 for the three year dollar cycle. Historically, the three year cycle averages out to 35 months. It seems that the yearly cycle decline also will lead into the three year cycle decline. A break below the three year cycle trend line confirms the three year cycle decline.

And it is no coincident that the dollar printed a monthly bearish reversal in July and the precious metals printed their first bullish month in a long time. I believe that once the three year declining trend line is lost, that the precious metals complex will really begin to rally.

Gold delivered a very bullish week.

Friday was day 7 for the daily gold cycle. This week saw gold break above the high from the previous daily cycle. This is the first higher high since last October. This confirms that June 28th marked the yearly cycle low and establishes a new trend. At day 7, gold can still rally for another 2 – 3 weeks before the cycle peaks.

The Miners also delivered a very bullish week. Where gold gained a respectable 8.41% the Miners printed a whopping 26.57% gain.

Friday was day 7 for the daily Miner cycle. The Miners printed a bearish reversal candle and upper Bollinger Band breach on Friday. After a 26% rally, the Miners a overbought and may need to cool down. But like gold, the Miners are on day 7 and can still rally for another 2 – 3 weeks before the cycle peaks.

The Miners also printed a clear and convincing declining trend line break this week. This verifies that June 26th was the yearly cycle low for the Miners.

Both gold and the Miners are on week 7 of their intermediate cycles. I expect that these to form as right translated weekly cycles which still could rally for another 15 to twenty week before hitting their cycle peak. To track their cycles I use the Likesmoney Cycle Tracker, which is available to premium subscribers in my Weekend Report.

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