Cycle Trading

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Gold’s daily cycle peaked in early May on day 9. Gold was then caught in a triangle consolidation until gold broke below the lower stem on May 27th and began its final daily cycle decline.

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Gold printed its lowest point since the day 9 peak on Tuesday. Wednesday gold formed a swing low and Thursday gold provided more bullish follow through. Friday gold defended the swing low and managed to close higher. Friday was quite likely day three of a new daily cycle. Gold will need to break above the declining trend line (in the vicinity of 1290) to confirm a new daily cycle. A break of the declining trend line will also involve breaking above the declining 50 MA which will prove to be a big test for gold.

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Notice in the previous intermediate cycle, as well with the current intermediate cycle, that once gold lost the 50 MA it began its decline into its intermediate cycle low. In both cases, gold tried to recover the 50 MA but could not hold on and then continued its intermediate cycle decline. Gold appears to have printed a daily cycle low at the 6 month support/resistance zone. If gold can break above the 50 day MA in a clear and convincing fashion, then gold is in a new intermediate cycle.