Dollar Reveals Its Hand

The dollar printed a huge bearish reversal on day 19 in early June. Since then the dollar has done a masterful job obscuring its intentions. But I believe that today it revealed its hand.

$$$ daily

Following the day 19 drop the dollar formed a swing low on day 20. Then regained the 200 MA as it continued to rally. Since a 1 day drop into a daily cycle low is so rare, we kept an opened mind to the possibility of the daily cycle stretching. Since it is also rare for a daily cycle to stretch past day 30, we needed to reconsider day 20 as the daily cycle low. We were waiting on a signal to help clarify the picture.

Losing both the 50 MA and the 200 MA last week and delivering more bearish follow through today makes it more likely that Monday was day 16 of a failed daily cycle. And a failed daily cycle signals a weekly cycle decline, which we see in the chart below.

$$$ (10 Per Page) Members Stock Charts com 20

The weekly cycle peaked on week 4 (at the upped triangle stem). The dollar has been caught in this weekly triangle consolidation since October. While I believe that a 3 year low was left behind in May, we will not know for sure until the dollar breaks out of the weekly consolidation in a clear and convincing fashion.

gold daily

Gold has enjoyed the dollar’s daily cycle decline by rallying 13 out of the past 20 days.

At day 16 the dollar is two days shy of entering its timing band for a daily cycle low. At day 19, gold is taking advantage of the fact that the dollar has entered its primary decline by making one more push higher.

But at day 19 gold has also entered its timing band for a daily cycle low. Perhaps gold is waiting on the dollar to emerge from its daily cycle low to begin its daily cycle decline.

gold sos

The large Selling on Strength number for gold does suggest that the Big Boys are bracing for some profit taking. Gold has locked in a right translated nature to its daily cycle by printing new daily cycle high on day 19. This sets up the expectation of a brief daily decline. And then gold will be poised to break out to make a higher high.


8 thoughts on “Dollar Reveals Its Hand

  1. Question: Does gold need to break the blue trend line now at about $1280 to complete its daily cycle. In other words, can a daily cycle be counted or completed without breaking such trend lines?

    • Yes, we are looking for a break of the daily cycle trend line to confirm the daily cycle decline.

      Can a cycle be counted compete without breaking it? Possibly, but I rather not speculate on that

      • It does not happen often. How often would make for an interesting study …

        Here are the conditions for it to happen.

        image hoster

        If there is an accelerated trend line, then the breach of the accelerated trend line would confirm the daily cycle decline. So it is possible to have a break of the acerbated trend line but not the daily cycle trend line.

        If a swing low occurs below the accelerated trend line but above the daily cycle trend line then the conditions are there for this to happen. Then a break to new highs confirms that the swing low was the daily cycle low.

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