Cycle Trading

Gold is in its timing band for printing a yearly cycle low.

Forming a right translated daily cycle is one of the first tasks that gold needs to accomplish to signal that a yearly cycle low has formed. Gold printed a new high on Tuesday. A new high on day 11 begins to shift the likelihood towards a right translated daily cycle formation. The previous daily cycle was quite stretched at 48 days. That sets up the possibility for a shortened daily cycle to follow the stretched daily cycle, which would balance out the cycles. Once gold declines into its daily cycle low, as long as gold remains above the previous low 1124.30 then gold would have broken the pattern of lower lows.

Oil printed a higher high on Tuesday. A new high on day 33 locks in a right translated daily cycle formation. However oil then reversed and closed lower for the day, forming a bearish engulfing candle. Oil also closed below the 10 day MA to signal that it has begun its daily cycle decline. A close below the daily cycle trend line will then confirm that oil is in a daily cycle decline. As we discussed on on Sunday, oil still needs to complete a yearly cycle decline. With oil already in its timing band for a yearly cycle low sets up an expectation that oil’s next daily cycle will form as a left translated, failed daily cycle to usher in the yearly cycle decline.