Cycle Trading

The dollar formed a bearish reversal on Friday, day 16. A swing high formed on Monday and Tuesday saw a clear and convincing break of the daily cycle trend line to confirm the dollar has entered its daily cycle decline.

The dollar peaked on day 16, which locks in a right translation to this daily cycle. So once a low is formed our cyclical expectation is to see the dollar go on to print a higher daily cycle high. The caveat to that would be if this daily cycle fails, which would change the expectation to lower highs and lower lows.

If the dollar is going to avoid being drawn into a left translated intermediate cycle decline then it will need to find its footing immediately. The dollar is on the verge of losing the support at the weekly 200 MA. And if that happens then there would be little to stop the dollar from declining into an intermediate cycle low.

Gold continues to rally, closing above the 200 MA and pierced the 50 MA today.

Gold still faces several hurdles if it is to print a right translate cycle. Today gold closed above the 200 MA and now has pierced the 50 MA. Gold will need to rally past the 50 MA and also break above the resistance at 1330 if it wants to avoid forming another left translated daily cycle.

One thing to keep in mind is that if gold is going to form a left translated daily cycle, then gold normally would peak by day 8. And there was 23 million printed today on the Selling on Strength. Of course the reason why we are keeping an open mind about this is that gold is only on week 14 of the intermediate cycle.

Gold’s weekly cycle peaked on week 11 and is now currently on week 14. It is still to early for the weekly timing band for an intermediate cycle low. With the daily cycle currently at day 5, it can easily go another 4 – 5 weeks. And if that daily cycle forms as a left translated cycle that would take the intermediate cycle out to weeks 19 or 20 which is right in the timing band for an intermediate cycle low.