Cycle Trading

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Gold delivered a clear and convincing break of its daily cycle trend line today.

There is still some ambiguity as to whether Friday was day 13 of a failed daily cycle or was it day 42 of an extended right translated daily cycle.

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Gold delivered a clear and convincing trend line break making Wednesday day 3 of a new daily cycle. Evidence is leaning toward Friday being day 13 of a failed daily cycle. And if Friday was a 13 day failed daily cycle low then we would expect the current daily cycle to roll over by day 8. The 53 million Selling on Strength printed by gold today along with the big 154 million Selling on Strength printed by the Miners support that scenario.

And the dollar outlook does not look encouraging for gold.

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The dollar printed a new high today, at day 25. The bearish reversal by the dollar likely helped gold deliver the declining trend line break. This dollar reversal should lead to a daily cycle decline. Since it is getting late in the dollar’s daily cycle we can expect a short decline into a daily cycle low.

You will notice that gold’s decline into its daily cycle low essentially coincided with the dollar’s rally. So if the dollar is expected to find is low over the next 5 days that would coincide with gold’s daily cycle peaking by day 8.