Waiting On The Dollar

Gold peaked on August 10th, then began its daily cycle decline.

Gold printed its lowest point on day 30, placing it in its timing band for a DCL. While gold has formed a daily swing low, gold still needs to break above the declining trend line to confirm the new daily cycle.

Stocks peaked on August 16th then began its daily cycle decline. Stocks formed a lower low on Tuesday to extend its daily cycle decline. Tuesday was day 54, placing stocks deep in their timing band for a daily cycle low.

Both gold and stocks have been trading inversely with the dollar. The dollar bottomed on August 11th. And since the dollar began to rally, both gold and stocks began their respective daily cycle declines. I suspect that both gold and stocks are not likely to regain their footing until the dollar begins its daily cycle decline.

Gold Delivers Buy Signal

Gold rallied for 1.72% on Thursday to close above the 50 day MA.

Notice how RSI 05 is embedding in overbought.  That signals that gold has begun the advancing phase of a new intermediate cycle.  That aligns with gold being in a daily uptrend. Forming a swing low and above the upper daily cycle band indicates a continuation of the daily uptrend. and signals a cycle band buy signal.

Gold Bullish Reversal

Gold printed a bullish reversal on Monday.

Monday was day 33 for the daily gold cycle, placing it in its timing band for a DCL. Monday’s bullish reversal eases the parameters for forming a daily swing low. A break above 1817.10 will form a swing low. Then a close above the converging 10 day MA and the 200 day MA will signal the new daily cycle. In the Weekend Report I will breakdown what a new daily cycle means in terms of the longer term, intermediate cycle.

Gold Update

Gold broke below the previous DCL on Monday to form a failed daily cycle and signal that gold is also seeking out its ICL.  

Gold delivered bearish follow through on Wednesday, closing below the 1900 support level. However in the Thursday morning premarket — gold is in the process of forming a bullish reversal. If gold can form a bullish reversal on Thursday then a swing low and recover the 1900 level — that would signal the daily cycle low and possibly the intermediate cycle low as well. Which I plan to discuss further this weekend in the Weekend Report.

Bullish Case For Gold

Gold broke below the March 16th low on Tuesday.

March 16th was day 32 for the daily gold cycle, placing gold in its timing band for a DCL. Gold closed above the 10 day MA six days later and in real time it looked like day 32 was the DCL. Then gold broke below the day 32 low on Tuesday, and the question is if gold is now in a failed daily cycle. Following are 5 reasons for the bullish case for gold.

  1. The 10 day MA. While gold did close above the 10 day MA, it did not manage to turn it higher. So when gold broke below the day 32 low on Tuesday, that signaled a continuation of the daily cycle decline.
  2. Undercut. Gold broke below the day 32 low on Tuesday then formed a bullish reversal. Often times we see an undercut to mark the cycle low.
  3. Support. Gold formed a bullish reversal off of support from the 50 day MA. The 50 day MA is a major line of support.
  4. Bullish Divergence. There are bullish divergences developing on the oscillators that often occur at the cycle low. This indicates that Tuesday was day 41 of an extended daily cycle.
  5. Uptrend. Gold is currently in a daily uptrend. If gold forms a swing low above the lower daily cycle band then gold will remain in its daily uptrend and trigger a cycle band buy signal and then we will label day 41 as the DCL.

Gold & Oil Form Weekly Swing Highs

Both gold & oil formed weekly swing highs this week.

Gold formed a bearish weekly reversal last week. This week gold is delivering bearish follow through by forming a weekly swing high. A close below the breakout level will signal the intermediate cycle decline.

Oil also printed a bearish weekly reversal last week and is delivering bearish follow through this week. Not only has oil formed a weekly swing high, oil also broke below the weekly trend line to signal the intermediate cycle decline. Oil should go on to break below the 10 week MA and turn it lower in order to complete its intermediate cycle decline. Oil is currently in a weekly uptrend. Oil will remain in its weekly uptrend unless it closes below the lower weekly cycle band.

Gold Delivers Bearish Follow Through

Gold closed below the 10 day MA on Monday.

Gold ran into resistance at the 2100 level last week. We discussed on Thursday that a close below the 10 day MA would signal the daily cycle decline. Gold should go on to turn the 10 day MA lower as is seeks out its DCL. However, gold is in a daily uptrend. If gold forms a swing low above the lower daily cycle band then gold will remain in its daily uptrend and trigger a cycle band buy signal.

Gold Resistance

Gold formed a swing high on Wednesday, day 27, placing gold in its timing band for a DCL.

If gold delivers any bearish follow through and closes below the 10 day MA, that would signal the daily cycle decline.

We can see on a longer term view that gold was approaching resistance at its all-time highs and traders are taking profits. This would be a logical place for a daily cycle decline. However, if gold reverses and closes above this resistance level, that would be a buy signal — using the previous all time high as the stop.

Gold Uptrend

Gold is demonstrating a bullish change in behavior.

Prior to printing the late December DCL, gold was in a pattern of printing lows below the lower daily cycle band. That is characteristic of a daily downtrend. Since the late December low that pattern has changed. Gold is now forming highs above the upper daily cycle band and lows are now forming above the lower daily cycle band. This is characteristic of gold being in a daily uptrend. Gold will remain in its daily uptrend unless it closes below the lower daily cycle band.

Gold – Still Waiting on a Trend

My apologies to Mick & Keith

This is the one chart to watch for gold’s next trending move. Gold is in a monthly triangle consolidation. In a triangle consolidation the cycle low can migrate to the apex of the triangle. A bullish close above the declining monthly trend line should result in a powerful trending move.