Gold’s daily cycle peaked on day 9 and today was day 20. Gold has locked in a left translated nature to this daily cycle.
While a left translated daily cycle is a bearish signal, what I am watching is the 1251.70 level which was the previous daily cycle low. A break below 1251.7 produces another failed daily cycle. And that would have me thinking that week 16 was not an intermediate cycle low. At 16 weeks, that was on the early side for an intermediate low.
Since gold was contained by the declining weekly trend line, breaking below the previous daily cycle low would signal that gold is still in the intermediate cycle decline that began in June. That would make this week 20, which is right in the normal timing band for an intermediate cycle low.
After rallying for ten days, the dollar has now stalled out at the 81.50 level, which is just below the 200 MA.
Tuesday was day 12 for the daily dollar cycle. The dollar currently has a 10 day peak, which more likely indicates a right translated is forming. The dollar is also encroaching its daily cycle trend line. A break below the trend line will signal that the daily cycle is in decline.
Backing out the daily chart two points immediately occur to me. The first thing that occurs to me is the True Strength Indicator is at a level that has seen the dollar reverse, in most cases. The second thing is that the 200 MA has been a significant resistance/support line. The dollar tends to break the 200 MA and overshoots it. Then there is an obligatory back test of the 200 MA. Well the dollar broke below the 200 MA in September and now is in the process of backtesting the 200 MA. A rejection of the 200 MA will send the dollar down into its yearly cycle decline and likely send gold rallying…