Cycle Trading

The dollar broke below the daily cycle trend line on Thursday to confirm its daily cycle decline.

Thursday was day 18 for the dollar’s daily cycle which means that the dollar has entered its timing band for printing its daily cycle low. The dollar’s intermediate cycle is mature and due for an intermediate cycle decline. The dollar would need to break below the previous daily cycle low of 99.25 to form a failed daily cycle to confirm an intermediate cycle decline. But with a peak on day 16 the current daily cycle is setting up as a right translated cycle and therefore likely to print a higher low. In fact we could see the dollar find support at the rising 50 day MA and print its DCL. And we have often seen the dollar reverse on or around the Employment Report.

But with the dollar declining into its daily cycle low gold has been rallying.

Thursday was day 13 for the daily gold cycle. Gold closed above the upper daily cycle band on Thursday to signal an end to its daily downtrend. The higher high on day 13 also begins to shift the likelihood towards a right translated daily cycle formation. We see that gold is approaching its declining 50 day MA. It is early enough in gold’s daily cycle that any reversal off the 50 day MA may only cause gold to decline into a half cycle low. With gold rallying out of a yearly cycle low and the prospect of the dollar beginning an intermediate cycle decline signals that any dip in gold should be bought.