Cycle Trading

Gold broke below the March 16th low on Tuesday.

March 16th was day 32 for the daily gold cycle, placing gold in its timing band for a DCL. Gold closed above the 10 day MA six days later and in real time it looked like day 32 was the DCL. Then gold broke below the day 32 low on Tuesday, and the question is if gold is now in a failed daily cycle. Following are 5 reasons for the bullish case for gold.

1. The 10 day MA. While gold did close above the 10 day MA, it did not manage to turn it higher. So when gold broke below the day 32 low on Tuesday, that signaled a continuation of the daily cycle decline.
2. Undercut. Gold broke below the day 32 low on Tuesday then formed a bullish reversal. Often times we see an undercut to mark the cycle low.
3. Support. Gold formed a bullish reversal off of support from the 50 day MA. The 50 day MA is a major line of support.
4. Bullish Divergence. There are bullish divergences developing on the oscillators that often occur at the cycle low. This indicates that Tuesday was day 41 of an extended daily cycle.
5. Uptrend. Gold is currently in a daily uptrend. If gold forms a swing low above the lower daily cycle band then gold will remain in its daily uptrend and trigger a cycle band buy signal and then we will label day 41 as the DCL.