Waiting for the Other Shoe to Drop

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Gold broke convincingly above the 50 day MA on Wednesday. Gold has breached the declining trend line and closed above the upper daily cycle band. This confirms Wednesday as day 6 of the new daily cycle.

gld

The breach of the declining trend line also signals a new intermediate cycle. However we need to see a clear and convincing break of the declining trend line to confirm the new intermediate cycle. We are also waiting to see how gold reacts when the dollar rallies from its impending daily cycle low.

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Wednesday was day 25, placing the dollar deep in its timing band for a daily cyclel low. A break above 93.84 forms a swing low and signals a new daily cycle. If the dollar were to begin to rally on Thursday that may cause gold some trouble at the declining trend line.

But the bigger picture is that the dollar has begun to close below the lower daily cycle band. This indicates the start of a daily down trend, which aligns with my view that the dollar has begun its 3 year cycle decline. If that is the case, then this new daily dollar cycle should form as a left translated daily cycle.

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