Cycle Trading

The dollar’s strength seems to have caused some inflection points.

The dollar broke above the declining cycle trend line today signaling a new daily cycle. The dollar regained the 200 MA on Thursday. There are a couple of things that we will need to watch here. The dollar has been in the grip of an intermediate cycle decline since June 9th. Our expectation is for the dollar to form left translated daily cycles until the intermediate cycle low prints. So usually we see a daily cycle peak on or before day 8 for left translated daily cycles. Thursday was day 7 for the new daily cycle. A rally past day 8 suggests a new intermediate cycle could be in play.

There is one other thing to watch here. The 82.50 level. The previous daily cycle peaked on August 2nd at 82.49. A break above 82.50 forms a higher high which is the hallmark of a new intermediate cycle.

We can see that as the dollar has rallied the past few days, gold has faltered.

Thursday was day 16 for the daily gold cycle. Gold sports a day 15 peak with a swing high formed today. A break of the daily cycle trend line will confirm that gold has entered its primary cycle decline. Now gold still has time in its daily cycle to go higher. And until there is a break of its daily cycle trend line — there isn’t one.

The CRB also formed a swing high today in response to the dollar strength.

Like gold, the CRB peaked on day 15 and formed a swing high on day 16. A break of the daily cycle trend line signals a daily cycle decline.

Since both gold and the CRB peaked on day 15, it is likely that both will result in right translated daily cycles,

Thus, maintaining their bullish posture …