Cycle Trading

Summary

• The dollar was rejected at resistance at the 200 day moving average
• A peak on day 8 raises the risk of a left-translated daily cycle
• The dollar remains in a daily downtrend
• A close below the 10 day moving average would signal continued daily cycle weakness
• A break below 97.75 would extend the intermediate cycle decline
• Gold formed a bullish reversal following dollar weakness
• Day 18 places gold in the early part of its timing band for a DCL
• A confirmed swing low would label day 18 as the DCL
• Gold remains in a daily uptrend with a cycle band buy signal

The dollar was rejected by the 200 day moving average on Monday, reinforcing resistance at a key longer-term level. A peak on day 8 sets the dollar up for a possible left-translated daily cycle formation. The dollar remains in a daily downtrend.

A swing high followed by a close below the 10 day moving average would indicate a continuation of the daily cycle decline and signal a cycle band sell signal. A break below the prior DCL at 97.75 would extend the intermediate (weekly) cycle decline.

Gold responded to the dollar’s rejection with a bullish reversal on Monday, closing back above the 10 day moving average. Monday was day 18 for gold, placing it in the early part of its timing band for a daily cycle low. If the dollar is rolling over into another daily cycle decline, an early DCL in gold is certainly possible.

Gold will need to form a swing low to confirm day 18 as the DCL. Gold is currently in a daily uptrend. Reclaiming the 10 day moving average indicates a continuation of the daily uptrend and signals a cycle band buy signal.