The 12/26/14 Morning Update

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Gold is catching a bid this morning.

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The daily gold cycle peaked on day 22. It printed its lowest point since then on Monday, day 30. Then gold consolidated for 2 days.

The rally this morning has caused gold break the declining trend line to signal a new daily cycle. Gold will still need to break above Monday’s high 1202 to form a swing low. Confirmation of a new cycle means that gold just printed a right translated cycle. Therefore our expectation would be to see gold break above the previous high of 1238 during the new daily cycle.

The dollar appears poised to help gold along.

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Our intermediate dollar outlook suggests that an intermediate decline is imminent. A left translated daily cycle, peaking by day 8, is needed for the dollar to begin its intermediate cycle decline. The current daily cycle high for the dollar printed on day 5. If that remains, then that would mean a left translated daily cycle is being formed. A break below the day 5 low of 89.85 forms a swing high and signals the daily cycle decline. A break below the previous low of 87.83 forms a failed daily cycle and confirms the intermediate dollar decline.

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