Cycle Trading

PRE-SUMMARY

Gold formed a swing low and closed back above the 10 day moving average, signaling day 46 as the daily cycle low.

Gold continued lower into Thursday’s session, printing its lowest point on day 46 and placing the metal deep into its timing band for a daily cycle low.  From a cycle perspective, gold found support at the rising 200 day moving average and then formed a swing low on Friday. Gold also closed back above the 10 day moving average, satisfying the requirements needed to signal day 46 as the daily cycle low.This places gold in the early stages of a new daily cycle. Gold should now begin turning the 10 day moving average higher as it rallies out of the cycle low.

The decline into the day 46 low caused the 10 day moving average to turn sharply lower. While the new daily cycle has been signaled, gold is now approaching potential resistance at the 50 day moving average.  What is clear is that gold responded positively from support at the 200 day moving average and has reclaimed the 10 day moving average after becoming stretched to the downside. However, a new daily cycle does not automatically result in an immediate advance. Gold may need to consolidate in order to allow the 10 day moving average time to flatten out before price can challenge resistance at the 50 day moving average.If gold can continue building above the 10 day moving average and reclaim the 50 day moving average, then the rally out of the day 46 cycle low would indicate improving daily cycle strength. If the 50 day moving average continues to act as resistance, then additional consolidation could develop before the next directional move emerges.

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CYCLE ALIGNMENT

• Mixed