Bearish Gold Divergence


The dollar printed its lowest point last week on Monday, day 38. Which places the dollar in its timing band for a daily cycle low. The dollar formed a swing low and rallied into Friday which makes it look like day 38 hosted the daily cycle low.

Then the dollar closed lower on Monday.


Even though the dollar closed lower on Monday, it still appears to be rallying out of a daily cycle low. And I think gold’s reaction on Tuesday supports that notion. Lately when the dollar declines, gold has rallied.

gold daily

In The Weekend Report we discussed the conflicting messages from gold.

The evidence that gold is in a new intermediate cycle:
* A new high on day 14 shifts the odds towards a right translated daily cycle formation.
* Gold is establishing a new daily uptrend.
* Week 21 places gold in its timing band for an intermediate cycle low.
* A weekly swing low has formed.
* Gold has broke above the declining weekly trend line.
* Gold has closed above the 50 week MA.

Reasons that prevents us from labeling May 9th as the ICL.
1) Gold has yet to deliver a failed daily cycle.
2) The dollar is beginning to rally into a new daily cycle.
3) A weekly swing low has formed on the dollar.
4) The Miners have been diverging bearishly from gold.

So instead of rallying on a day where the dollar closed lower, gold also closed lower — perhaps sensing the dollar has formed a daily cycle low. A close below 1261.80 will form a swing high on gold. Then a close below the 200 day MA will confirm that gold’s daily cycle is in decline. Since the previous 4 daily cycles for gold stretched between 28 days and 48 days, a peak on day 14 could still result in a left translated cycle formation.


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