Cycle Trading

Gold broke above the day 7 high today printing a new daily cycle high. As we noted this morning, a new high on day 13 has shifted the likelihood of this daily cycle forming as a right translated cycle. However, there are a couple of concerns to look at …

First there is a bearish divergence developing on the True Strength Indicator. Second, gold failed to hold on to today’s gains closing near the low of the day. Now a break below 1212.60 forms a swing high. And should gold close below its 50 day MA of 1211.02, that would be another signal that this daily cycle is in decline. A break below the daily cycle trend line would confirm that the daily cycle is in decline.

And as we will see below, there are some concerns developing with the Miners.

Today was day 17 for the daily Miner cycle. Typically we like to see the Miners lead gold, so this is a concern. Looking at the weekly chart above we can see that the Miners are running into dual resistance at the convergence of the declining weekly trend line and the resistance of the 20 level. Breaking above this would deliver a very bullish signal. However, the Miners may lack the energy to break through this dual resistance. The Miners are one day shy of entering their timing band to seek out a daily cycle low. Failure to break through this dual resistance would likely send the Miners into a daily cycle decline.