Cycle Trading

A cycle that peaks past the normal cycle midpoint, will likely be right translated. Right translated cycles are characterized by setting high highs and higher lows.

The dollar’s timing band for a daily cycle low runs from day 18 – day 25. We see that when the dollar peaks prior to day 9 that the dollar’s daily cycle usually forms in a left translated, failed manner. Consequently the later the dollar peaks past day 9 increases the likelihood of a right translated cycle forming.

The dollar’s daily cycle peaked on day 16. A swing high formed and the dollar delivered a clear and convincing break of the daily cycle trend line today confirming that the daily cycle decline has begun.

A day 16 peak indicates that this cycle is likely to form in a right translated manner. So while translation can give us an indication of cycle direction, price action trumps translation. In the above chart, should the dollar break below the previous daily cycle low of 79.686 then that confirms a failed daily cycle by printing a lower low.

Back to Translation.

A cycle that peaks prior to the normal cycle midpoint will likely be left translated. Left translated cycles are characterized by setting lower highs and lower lows.

The daily equity cycle has peaked on day 18, formed a swing high and now has broken below the daily cycle trend line. Since the rising 50 MA is so close a break below the rising 50 MA will provide clear and convincing confirmation of the daily equity cycle decline.

The timing band for stocks runs from 30 – 45 days. So often times a cycle that peaks on or before day 20 has good odds of forming in a left translated manner setting up the expectation of a failed daily cycle.

So in order for this daily cycle to form in a left translated manner the cycle will need to run past 36 days. But once again price action trumps translation. Due to this being the fourth daily cycle of the current intermediate cycle we are expecting this cycle to fail. A break below 1767.99 produces a failed daily cycle regardless of the daily cycle count.

The odds have firmly shifted towards Gold’s daily cycle forming in a right translated manner.

Gold set a new daily cycle high today. Gold’s normal timing band for a low runs from day 18 – day 28. A day 15 peak is past the normal midpoint to the daily cycle. So no we are watching the 1267.70 level. A break above that level forms a higher high, confirming a new intermediate cycle.