Cycle Trading

The Miners broke lower, printing a lower low. Tuesday was day 12 for the daily Miner cycle, placing the Miners 6 days shy of their timing band for a daily cycle low. Therefore the expectation is to see the Miners continue lower which aligns with the Miners trending lower since early July.

But there is a bullish signal developing for the Miners.

The lower low on Tuesday indicates a continuation of the intermediate cycle decline. However the oscillators are diverging bullishly. Often times a bullish divergence can develop on the oscillators during an intermediate cycle low.

The last time a significant bullish divergence developed during an intermediate cycle low occurred late 2015 and early 2016. The above chart is from January 2016 which shows the bullish divergence that developed on the Miners at that time. Please notice that the bullish divergence for late 2015/early 2016 was not as pronounced as the current bullish divergence (as seen in the first chart).

And the ensuing rally out of the early 2016 low.

The other piece to the puzzle would be for the dollar to be declining into its intermediate cycle low.

In the Weekend Report we discussed the dollar is beginning its intermediate cycle decline. On Tuesday, 9/04, the dollar closed above both the 10 day MA and the declining trend line to confirm that last Tuesday was the DCL. However the dollar printed a bearish reversal on Tuesday. This eases the parameters for forming a swing high. A break below 95.08 would form a swing high, setting up a left translated daily cycle formation to align with our intermediate dollar framework. Then the gravitational pull from the impending intermediate cycle decline should cause this new daily cycle to left translate and roll over. Once that happens I believe that we will see the Miners rally.