Cycle Trading

The dollar formed a swing low and broke the declining trend line declaring Wednesday day 4 of a new daily cycle.

This was the second consecutive failed daily cycle for the dollar. The bullish TSI divergence and the bold bullish breakout for the dollar are characteristic of a new intermediate cycle.

At 20 weeks, the dollar is already in the timing band for an intermediate cycle low. Now combined with a clear and convincing weekly swing low and declining trend line break signals a new intermediate cycle.

So if the dollar is rallying out of an intermediate cycle low, then that should take an extended daily gold cycle off the table.

An extended daily gold cycle would have gold at 33. But with a new daily and intermediate cycle for the dollar beginning, that shifts the likelihood that day 20 was a daily cycle low. And that would make today day 13 of a new daily cycle. The bearish divergence developing on the daily TSI suggests that the intermediate cycle may be rolling over, as well.

Backing out to a weekly chart we can see that the weekly TSI has reached a level that has seen the top of other intermediate cycles.

Upon closer inspection of the weekly chart we see that gold has been rejected by the 1400 level. A weekly bearish engulfing candle has formed. Even more ominous is that the weekly TSI has formed a bearish crossover. This further supports the notion that the intermediate gold cycle has topped. A break of the weekly trend line will confirm the intermediate cycle decline.