Cycle Trading

Gold has been closing above the upper weekly cycle band which indicates that gold is in a weekly uptrend. However, I am getting suspicious that the intermediate cycle has already peaked.

The intermediate gold cycle printed its highest point during week 14. Gold formed a lower high and a lower low this week which forms a weekly swing high. While a weekly swing high does not guarantee that a weekly decline has started, no weekly decline can begin without a weekly swing high. A close below the upper weekly cycle band will signal an intermediate cycle decline.

This was week 15 for the intermediate gold cycle. And as we will see on the daily chart, it appears as if a new daily cycle has just begun. Allowing 4 – 6 weeks for the new daily cycle to conclude would take gold out to around weeks 19 or 20, which is right in its timing band to print an intermediate cycle low. So if this new daily cycle forms as a left translated cycle, it could very well usher in the intermediate gold decline.

I am also suspicious on what I see developing the daily chart.

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The previous daily cycle appears to have had a false break out just prior to peaking on day 18. Gold then formed a swing high and printed its lowest point on Tuesday, day 20. That places gold in its timing band to print a daily cycle low. Gold formed a swing low on Wednesday that closed above the upper daily cycle band which indicates a new daily cycle. But this new daily cycle is showing signs of concern.

After forming a swing low on last Tuesday, gold printed a bearish reversal on Thursday followed by forming a daily swing high on Friday. Gold also closed (barely) below the upper daily cycle band. That is an early indicator that this daily cycle is about to roll over. If gold continues lower, then we would have potentially a left translated cycle forming which would lead into the intermediate cycle decline.