Cycle Trading

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The dollar broke out to a new high on Tuesday.

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The dollar failed to deliver a break of the daily cycle trend line as it sought out its daily cycle low. But it did breach the accelerated (red) trend line. The accelerated trend line breach deep in the timing band for a DCL coupled with a break to new highs verifies 8/08 as a 27 day, right translated daily cycle low. And that makes Tuesday day 7 of the new daily cycle.

The dollar’s strength sent gold lower today.

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Tuesday was day 12 for gold’s daily cycle. Gold peaked on day 5 then drifted sideways. Yesterday gold tested the daily cycle trend line. Today’s trend line breach signals that gold has now entered its daily cycle decline. With a day 5 peak, gold appears to have locked in a left translated nature to this daily cycle. That gives us the expectation that gold will break below the previous daily cycle low of 1281.00. With gold on day 11 we could see gold trend lower for the next 7 to 15 sessions.

And it is not too surprising that the day that gold breached its daily cycle trend line (signaling an intermediate decline) is the same day that stocks confirmed the new intermediate cycle.

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Tuesday was day 8 for the daily equity cycle. Stocks have now been up 6 of the last 8 days. The break of the declining weekly cycle trend line verifies that stocks have left behind an intermediate cycle low. Following a right translated intermediate cycle has us expecting to see this new intermediate cycle go to print a higher weekly cycle high.