Cycle Trading: Gold's Bullish Reaction to the Dollar

The dollar continues its daily down trend.

The dollar has been in a daily down trend characterized by peaks below the upper daily cycle band and lows below the lower daily cycle band.

The dollar broke below the daily cycle trend line and closed below the lower daily cycle band to signal that the dollar is declining into its daily cycle low. The peak on day 2 has locked in a left translated cycle formation. A break below the previous daily cycle low of 93.62 will form another failed daily cycle and that will extend the intermediate cycle decline.

Both gold and the Miners reacted bullishly to the dollar breaking lower.

The daily gold cycle peaked on day 18 and the printed its lowest point on day 19. Today gold broke convincingly above the declining trend line and closed above the upper daily cycle band to confirm that today was day 4 of a new daily cycle. Gold continues in its daily uptrend and will remain in it until it closes below the lower daily cycle band.

The Miners daily cycle peaked on day 19 and then printed its lowest point on day 22, placing the Miners in their timing band for daily cycle low. The Miners formed a swing low and broke above the declining trend line on Wednesday. Today the Miners delivered more bullish follow through by breaking to new highs to confirm that today was day 3 of the new daily cycle.

The dollar is now overdue to print its intermediate cycle low. It is very likely that gold is on week 21 for its weekly cycle, placing it in its timing band for an intermediate cycle low. The Miners are on week 14 and this new daily cycle should take the Miners into their timing band for an intermediate cycle low. There is a good chance that once the dollar begins to rally out of its intermediate cycle low, that should send both gold and the Miners into their intermediate cycle declines.