Waiting on Follow Through

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Gold broke above the declining trend line on Wednesday signaling a new daily cycle.

gold 2

But as we discussed last night, we would like to see some follow through before labeling Wednesday a daily cycle low. What we would like to see is a clear and convincing break of the declining trend line that forms a swing low. A break above 1251.30 forms a swing low.

While gold has yet to show some bullish follow through we see that palladium, which often leads gold, has.

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Palladium appears to have printed a 20 day cycle low on Monday. It formed a swing low on Wednesday with some follow through today making today day 3. Palladium also closed above an important resistance/support level today, which is another bullish signal. And I believe that the dollar helped propel palladium higher.

DXY00 Commodity Futures Price Chart for U S D

The dollar broke lower today. Our framework calls for the dollar to continue into a yearly cycle low. The dollar just completed an 18 week left translated failed weekly cycle. This current weekly cycle peaked on week 2. What was significant is that the dollar broke below the week 2 low today forming a swing high. We could see up to another 12 to 16 more weeks before the intermediate cycle low is due.

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