Cycle Trading

The dollar is still seeking out its daily cycle low.

As the dollar was declining into the day 40 low, gold rallied to an all time new high. But once the dollar formed a swing low and closed above the 10 MA, gold delivered a bearish surprise. But notice when the dollar made a lower low by breaking below the day 40 low last Tuesday — gold did not print a higher high. I think the gold is sniffing out the dollar’s pending DCL.

The dollar is very deep in its timing band for a DCL. Since the dollar did not break above the declining trend line as it rallied out of its day 40 low, breaking below the day 40 low extended the daily cycle decline to make Tuesday day 48 for the daily dollar cycle.

Gold did close above the 10 day MA on Tuesday. However, gold did not manage to turn the 10 day MA higher. In fact it the 10 day MA is now turning lower. This signals that gold is extending its daily cycle decline making Thursday day 53. As the dollar continues to rally out of its DCL gold should go on to break below the day 47 low in order to form its daily cycle low.

And I think that not only will the dollar confirm a new daily cycle, but I think this will turn out to be an intermediate cycle low. I plan to discuss this and what this means for gold in the Weekend Report.