The Bullish case for gold begins with what is unfolding in the dollar.
The dollar’s daily cycle peaked last Wednesday, which was day 25 and printed a bullish reversal on Friday. While the dollar failed to break below the daily cycle trend line to confirm a new daily cycle, it did breach the accelerated (red) trend line. And with the buck rallying out of a three year low, that may be all the correction we will see for the first daily cycle. Then a break to new highs will confirm Friday as the day 27 daily cycle low.
At week 14, a new daily cycle could lead into an intermediate cycle decline.
The dollar is currently on week 14 of its intermediate cycle. If the new daily cycle began on Monday, and allowing for the daily cycle to unfold for 4 to 5 weeks would bring the weekly cycle out to about weeks 18 or 19. Which is in the early part of the timing band for an intermediate cycle low. So a new daily cycle can potentially lead to the intermediate cycle decline.
Also notice that the weekly True Strength Indicator has exceeded the level that has seen other intermediate cycles roll over. I think that this is setting up where we will see one more push higher on the daily cycle. Which will peak on or before day 8. Then we will see the dollar begin its decline which will lead into an intermediate cycle decline. Predicated on the assumption that the dollar left behind a 3 year low in May, the intermediate decline should back test the extended consolidation zone and possibly meet the rising 50 week MA.
Here is how this relates to gold:
As shown above, gold tends to rally as the dollar declines into an intermediate cycle low.
So a quick pop higher by the dollar could see gold decline to the developing daily cycle trend line. As the dollar rolls over, that will help to send gold to new daily cycle highs.
It should be noted that a break of the dashed trend line signals a daily cycle decline for gold.
Now a quick word on bonds.
Bonds broke out to a new daily cycle high today. The daily cycle can still form in a left translated manner. But, a new high on day 9 begins to shift the likelihood of this daily cycle from forming as a left translated cycle to a right translated one. Which causes the daily cycle trend line to shift, as well.
The new high today causes the weekly cycle to set a new high on week 6.However, there are still bearish TSI divergences on both the daily and weekly charts.
If the daily cycle does not rollover in a day or two, then not only will this daily cycle form in a right translated manner it would also postpone the intermediate cycle decline to the next daily cycle.