Cycle Trading

Prior to August the dollar had been consistently closing above the upper daily cycle band which indicated that it was in a daily uptrend. Since August began, that has changed.

The dollar began to close below the lower daily cycle band in early August. At first this signaled an end to the daily uptrend. Then the rally out of the day 27 low peaked below the upper daily cycle band before breaking lower. And for the past 3 days the dollar has closed below the lower daily cycle band. This confirms that the dollar has begun a daily downtrend.

While day 27 is in the timing band for a daily cycle low, the absence of a declining trend line break makes it likely that this is an extended daily cycle with Thursday being day 39.

And there is more bad news for the dollar.

The dollar crashed below the 50 week MA on week 12 and then formed a weekly swing high. It was rejected by the 50 week MA signaling that the dollar has begun its intermediate cycle decline. And then today the dollar broke below the intermediate trend line, confirming its intermediate decline. If what I suspect is true that this is day 39 for the dollar’s daily cycle then the dollar should deliver a short bounce before completing its intermediate cycle decline.

And perhaps that is why gold did not break out if its current consolidation pattern.

A peak on day 8 followed by a swing high and a close below the upper daily cycle band all indicate that gold is in a daily cycle decline. I would have thought that with the dollar breaking below its intermediate trend line that it would provide enough of a tailwind to send gold rocketing higher. But perhaps gold is sniffing out a pending daily cycle low on the dollar. Still, gold is in a daily uptrend. Gold will remain in its daily uptrend unless it closes below its lower daily cycle band.