Cycle Trading: Exhausted Dolar
|Tuesday's weakness in the dollar caused a bullish reaction with gold.
Tuesday was day 12 for the daily gold cycle and gold broke out to a new daily cycle high. While gold is not out of the woods yet from the possibility of printing a failed daily cycle, a dollar declining into a long awaited daily cycle decline should help to lift gold higher. A new daily cycle high for gold on day 12, or thereafter, begins to shift the odds towards a right translated daily cycle formation.
The dollar printed an exhaustion candle on Tuesday, which was day 33 for the dollar's daily cycle. The dollar has been rallying since late August. Tuesday's exhaustion candle eases the parameters for forming a daily swing high. A break below 98.58 forms a daily swing high. And since the dollar is late in its timing band for a daily cycle low, any swing high now has good odds of sending the dollar into its daily cycle decline. With the dollar's daily cycle trend line is over 2 points lower we can use a close below the 10 day MA as our signal of the daily cycle decline.
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