Cycle Trading

On Wednesday we discussed how the Miners formed a swing low and closed above both the declining trend line and the 10 day MA to confirm that day 16 hosted the DCL. So if day 16 was the DCL then Wednesday’s drop is a cause for concern because a break below the day 16 low would signal that the Miners new daily cycle has failed.

However there are some reasons to that make me think that the Miners are still seeking their DCL.

1st off — Gold has not yet confirmed that it is in a new daily cycle.

While gold has formed a swing low, we are still waiting on a clear and convincing break above the declining trend line to confirm that day 41 was the DCL.

Another reason why day 16 may not be the DCL is because it often happens that the Miners are volatile as it is trying to establish its DCL.

The 3 previous DCL’s were all characterized by whipsawing.

Also the Miners did not cause the 10 day MA to turn higher.

One of the final confirmations of a daily cycle low occurs when the 10 day MA turns higher.

However I think that it will boil down to the dollar.

The dollar printed a bearish reversal on day 8 and went on to form a swing high on day 9, closing below the 10 day MA. The dollar continued to deliver bearish follow through by closing below the 50 day MA on Wednesday, which indicates that the dollar’s daily cycle is in decline. With the dollar being in its timing band for an intermediate cycle decline, a peak on day 8 would set the dollar up with a left translated daily cycle formation.

However, it is certainly possible that the dollar printed an early DCL on Thursday.

The dollar printed a bullish engulfing candle on Thursday. At 13 days it is a bit early to expect a DCL. But a close above 94.58 would form a swing low to signal a DCL. The a close above the upper daily cycle band would confirm a new daily cycle. And if the dollar confirms a new daily that will certainly be bearish for the Miners.