Cycle Trading

Stocks did not do too much on Wednesday and our frame work for stocks remains unchanged.

With stocks being in the 4th daily cycle of the current intermediate cycle we expect to see the daily cycle peak on or before day 20. The daily equity cycle currently has a day 8 peak. But at day 13 there is still time from one more pop higher before the daily cycle enters its primary decline.

Gold confirmed a new daily cycle last week and then peaked on Monday. Since then gold has been struggling. I suspect that if gold breaks below the 1220 support level that gold will will over into a failed daily cycle. How this plays out for gold will likely be impacted by what is happening with the dollar.

The dollar printed a shortened daily cycle low in late December. Wednesday was day 7 and the dollar printed another higher high. If the dollar did print an intermediate low late December then this daily cycle will likely form as a right translated cycle. If the dollar is still in the grip of an intermediate decline then this cycle will form as a left translated cycle. A break above Wednesday’s high of 81.166 keeps the right translated possibility on the table. A break below 80.828 forms a swing high and a left translated cycle becomes more likely.

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So how the dollar proceeds from here will likely determine golds immediate future.

We will need to wait to see which one blinks …

(Jack Dog thanks for the idea!)