Gold is often seen as a hedge against inflation, which is why gold trends to trade inversely to the dollar. However, as we have seen recently, gold is beginning to rally despite the dollar’ s strength.
And even with the dollar having a really big day on Tuesday, gold still managed to rally.
Tuesday was day 33 for the daily dollar cycle. Which places the dollar in its timing band for a daily cycle decline. Gold may be sniffing out a top to the dollar’s daily cycle. Gold may also be sniffing out the top to the dollar’s intermediate (weekly) cycle, as well. I plan to cover the dollar’s intermediate cycle in this week’s Weekend Report. And if the dollar does roll over into an intermediate cycle decline, that should provide the tail wind necessary for gold to break above the dual resistance of the 200 day MA And the 50 day MA to begin a trending move.
Gold broke below the day 5 low on Tuesday, to extend its daily cycle decline.
Since printing the day 55 low, gold has traded sideways, which allowed it to catch up to the 10 day MA. Tuesday was day 63, placing gold very deep in its timing band for a DCL. Tuesday’s bullish reversal helps to ease the parameters for forming a daily swing low. A break above 1779.20 will form a swing low. Then a close above the 10 day MA will signal the DCL.
Gold broke below the day 45 low on Monday to form a lower low.
While gold formed a swing low off of the day 45 low last week, it did not deliver any bullish follow through. So with gold undercutting the day 45 low on Monday, that extends the daily cycle decline. That makes Monday day 51 – which is very deep in its timing band for a DCL.
Since gold reversed off of the 200 day MA on Monday, it is possible to see gold form a swing low on Tuesday to signal the DCL. But the weekly chart suggests another possibility
Gold became stretched above both the 50 week MA and the 10 week MA on week 12. The current daily cycle decline caused gold to tag the 50 week MA and is allowing the 10 week MA to catch up to price. We could see gold tag the 10 week MA. At 55 days, if gold forms a daily swing low, after tagging the 10 week MA, that would have good odds of marking the DCL.
And gold also closed above the 10 day MA on Monday.
While gold did not break below the daily cycle trend line, Gold did print its lowest point on Friday, day 45. That places gold very deep in its timing band for a daily cycle low. The quick bullish RSI 05 reversal is characteristic of gold continuing its intermediate cycle advance. That aligns with gold begin in a daily uptrend. Since gold formed its swing low above the lower (and upper) daily cycle band that signals that gold remains in its daily uptrend and triggers a cycle band buy signal. So we will label day 45 as the DCL.
Gold is being squeezed by the declining 50 day MA and the rising 200 day MA.
Gold printed its lowest point on day 33, placing it in its timing band for a daily cycle low. Gold formed a swing low and managed to close above the 50 day MA to initially signal a new daily cycle. Since then, gold has lost the 50 day MA, which calls into question if day 33 was the DCL. And as of Tuesday, gold is threatening to lose the 200 day MA.
Gold needs to close back above the 50 day MA in order to label day 33 as the DCL and for the daily cycle to start to gain some traction. Losing support of the 200 day MA will signal a continuation of the daily cycle decline.
Gold printed a bullish reversal off of support from the 1800 level on Tuesday. Gold delivered bullish follow through on Wednesday by breaking above the 200 day MA to close above the converging 10 day MA and 50 day MA to signal a new daily cycle low.
Gold opened under pressure on Thursday and was driven below the 50 day MA. However, gold found support at the 10 day MA and recovered. Gold ended the day forming bullish reversal and closing back above the 50 day MA signaling that this is day 2 for the new daily cycle.
Gold printed a bullish reversal off of support on Tuesday.
The 1800 level had been a resistance level in early 2020. Now it has turned into a support level.
Gold printed a bullish reversal off of support of the 200 day MA on day 28. After crawling along the 200 day MA last week gold undercut the day 28 low. Tuesday was day 33, which places gold in its timing band for a daily cycle low. Tuesday’s bullish reversal eases the parameters for forming a swing low. A break above 1845.00 will form a swing low to signal a new daily cycle. However gold is facing triple resistance from the 200 day MA and the converging 10 day MA and the 50 day MA. No rally will be able to gain any traction until gold can close above these 3 moving averages.
Gold broke convincingly above the declining trend line on Monday and to make it appeare that November 30th was the ICL and that gold was now beginning a daily uptrend.
Then gold was attacked at the 1962 resistance level on Wednesday and again on Friday. This caused gold to slice through the 10 day MA and the 50 day MA to close below the 200 day MA. Gold also closed below the lower daily cycle band which ends its daily uptrend and begins a daily downtrend.
This was a bearish surprise. I have no doubt this was manipulation. But the reason why this attack was so successful may lie with the dollar.
The dollar printed its lowest point on Wednesday, day 52. That places it very deep in its timing band for a DCL.The dollar formed a swing low on Thursday and then a closed above the 10 day MA to signal the new daily cycle.
In my special report Gold v Dollar I will look at what is going on with the dollar. We will discuss the possibility that the dollar has not only formed a DCL but a yearly cycle low as well. And if so, that would spell trouble for precious metals.
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Back on 12/30/20 we looked at the precious metals sector.
Last week the Miners closed out the week being contained by the declining 10 week MA. This week the Miners have started off strong and have broken convincingly above the 10 week MA and is now testing the declining weekly trend line.
Gold has broken convincingly above its declining trend line confirming that week 37 was the intermediate cycle low.
And even with the gold Miners up 6.91% and gold up 2.72 % the Silver Miners continue to lead the charge.
The Silver Miners ended last week breaching the declining weekly trend line. This week they have delivered bullish follow through and started off really strong, up 7.85% on Monday. This is only week5 for the new intermediate cycle. Precious metals should rally for the next 2 – 3 months before topping.
Since recovering the 50 day MA, gold has continued higher.
A break above the day 15 high of 1912.00 will lock in a right translated daily cycle formation which aligns with gold being in a daily uptrend. Gold will continue in its daily uptrend unless it closes back below the lower daily cycle band.
Gold has had multiply tests of the declining intermediate trend line. These multiple test should weaken the trend line. In fact, gold pierced the declining trend line on Friday. A close above the declining trend line should send gold on a trending move.