Cycle Trading

The GLD ETF formed a swing low today.

The GLD ETF printed its lowest point on Wednesday, day 32, and formed a swing low today. However the swing low was not a clear and convincing swing low because GLD ended up closing lower on the day.

With the dollar breaking lower, GLD’s lower close signals that this may be a bumpy road.

While the dollar closed lower today, it managed to recover a bit after tagging the daily cycle trend line. With Thursday being day 24, the dollar is starting to get to the later stage of its timing band to print a daily cycle low. We are still waiting on a trend line break to confirm the final daily cycle decline for the dollar. I expect gold to rally once the dollar breaks convincingly below its daily cycle trend line.

We need to keep in mind that this daily dollar cycle has locked in a right translated cycle formation, delivering the expectation for the next daily cycle to print a higher high. So if gold does confirm a new daily cycle, it will likely run into some strong headwinds as the dollar rallies out of the impending daily cycle low.