Cycle Trading

The dollar followed through to the swing high that formed on Friday.

Monday was day 14 the daily dollar cycle. The big follow through day increases the odds that the daily cycle peaked on day 12. A break below the daily cycle trend line confirms that the dollar has entered into its daily cycle decline.

A day 12 peak does favor this daily cycle forming as a right translated cycle. If a right translated cycle forms then 8/20 marks an intermediate cycle low. If this daily cycle fails, then this would likely mean week 12 of the intermediate dollar cycle.

Stocks followed though to the upside today.

August 28th was day 46 for the previous daily cycle. That was the lowest point following the cycle peak in the beginning of August. Stocks did form a swing low the next day. However, we were waiting on a break of the declining cycle trend line to confirm a new daily cycle. Stocks provided that follow through today.

Monday was day 7 for the daily equity cycle. Now that a new daily cycle is confirmed we are on watch for this to form as a left translated daily cycle for the reasons we discussed in the Weekend Report.

Gold did not deliver upside follow through today on the weak dollar.

Gold had that bullish reversal on Friday that marked the lowest point since the day 15 peak. On a day where the dollar delivered followed through to the downside gold disappointed by closing lower after managing to form a swing low. Since the declining cycle trend line has not been breached there is still a possibility to see gold make one more move lower. Having said that, I will point out that gold topped the Buying on Weakness list on Monday. So we are waiting on gold to break above the declining cycle trend line to confirm a new daily cycle.

Then gold should be off to the races …