The 2/18/14 Morning Report

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The dollar has formed a swing low in the early morning hours.

DXY00 Commodity Futures Price Chart for U S D

Monday was day 16 for the dollar’s daily cycle. The dollar pierced the lower Bollinger Band and printed a reversal. A day 16 low would be two days shy of the normal timing band for a daily cycle low. The dollar could go lower. But a break above the declining trend line would confirm a new daily cycle.

Since the dollar just printed a failed daily cycle, the dollar is declining into an intermediate cycle low. Should Monday be the DCL, our expectation would be for a new daily cycle to peak on or before day 8. Then the dollar would continue its journey into its intermediate cycle low.

GCY00 Commodity Futures Price Chart for Gold C
screengrab

Gold has formed another higher daily cycle high on Tuesday. But has already given that back in this morning. Tuesday is day 12 for gold’s daily cycle. If the dollar does print a DCL here that could send gold into a half cycle low are even an early daily cycle low. Since gold printed a higher high this morning, earliest a swing high could form would be on Wednesday. Confirmation of a new dollar daily cycle will swing the odds of gold declining into a daily cycle low.

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