Clear and Convincing

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Tuesday was day 14 for the daily dollar cycle and the dollar continued lower.

DXY00 Commodity Futures Price Chart for U S D

The dollar is still four days shy of its normal timing band for a daily cycle low and therefore should continue lower. The dollar did find some support at the 79.80 level and reversed higher into the close. The dollar is beginning to get oversold and has pierced the lower Bollinger Band. We will need to be aware of the possibility of an early daily low forming. A break above 80.176 forms a swing low. A break of the declining trend line confirms a new daily cycle.

Last night we discussed that considering the dollar’s daily cycle has failed we would like to see a little more enthusiasm from the precious metals. Today they delivered.

GCY00 Commodity Futures Price Chart for Gold C

Gold had a big day rallying for 1.74%. In the process gold broke above the 1250 resistance level. Today gold also formed a swing low and confirmed a new daily cycle.

GCY00 weekly

Looking at the weekly chart we see that Gold has formed a weekly swing low. A weekly swing low does not guarantee a new weekly cycle. But a new weekly cycle cannot start without one. At 23 weeks the odds are favorable to this marking the intermediate cycle low. A break above the declining weekly trend line is necessary to confirm a new intermediate cycle.

The Miners were up big as well.

$ HUI Sharp Charts Workbench Stock Charts com 2

The Miners rallied a big 4.23%. And like gold, the Miners formed a swing low and broke clear and convincingly above the declining trend line to confirm a new daily cycle.

Bonds also had a clear and convincing trend line break today.

TLT Sharp Charts Workbench Stock Charts com 20

Bonds had printed 2 failed daily cycles in a row. If bonds were rejected by the declining trend line then they would have likely been headed into another failed daily cycle. The break above the declining trend line finally confirms a new daily cycle with Tuesday being day 12. But bonds are not out of the woods yet. They still need to break above the day 3 high of 104.62 to avoid printing a left translated daily cycle. A break above 104.62 swings the odds of this forming as a right translated cycle.

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2 thoughts on “Clear and Convincing

    • So far stocks have failed to set a new high following the day 39 low. The expectation is for stocks to print a higher high following a right translated daily cycle. Since stocks have not done so, today may still be part of the daily cycle decline — Day 44. We will need to look at this tonight.

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