Oct 29, 2012

The NYSE is closed today due to Hurricane Sandy. Most commodities are flat to down today as money flows moved to strengthen the $USD. I am posting this update for this reason, to show you that I believe we are in the last push of this new daily cycle in the dollar. As we are in a an intermediate Bear trend, this should prove to be a left translated daily cycle before leading to the bottom. From a technical side the dollar is painting a very large head and shoulders. Currently, price is right up against the left shoulder resistance as well as the 50 MA resistance. In the second chart below, you can see the very bearish ascending wedge forming and closing in on it's peak. Even though the dollar is testing it's highs again today, metals have yet to put in a lower low or match last weeks lows.

The following chart is a 5 hour current look of the USD. It's noted on the longer term chart above by the red arrow on the right hand side. This ascending triangle is a very bearish formation.

The Dollar is currently on day 8 of it's new daily cycle. Today we printed a new cycle high. Seeing as how we're in an intermediate bear trend, this daily cycle should prove to be a left translated cycle. The average daily cycle runs for 18-28 days in the dollar. If we're to peak around day 8, then the rest of the daily cycle will be bearish.

This is a weekly chart of the dollar displaying the new intermediate cycle that has just begun. Notice the declining trendline of the previous daily cycle. This helps to confirm the new intermediate cycle but one last thing is needed. The final candle in the previous cycle topped at $80.42. In order to confirm a new cycle, we need to form a swing high by exceeding that $80.42 mark. The intermediate cycle of the USD typically runs 18-22 weeks. With us topping out this early in the cycle, we can probably expect the rest of the cycle to decline. Coincidentally, this intermediate decline will be ending within the timing band of a yearly cycle low. This should prove to be extremely bullish for the inverse trade of metals and stocks.

IF last week's low in gold is indeed the lowest low, then we have begun a new intermediate cycle. But that is still in question. It's still highly likely that the dollar prints a higher high confirming it's new daily cycle pushing gold lower, which will mark the end of the last daily cycle. If that is the case, this will be week 24 of the previous intermediate cycle and next week would begin week 1 of the new cycle. In order to confirm the new cycle, gold needs to stay above it's previous low, and then form a swing low rising above the $1730 mark.

From the daily cycle, Oct 24th has been the lowest low, therefore being the placeholder of the ending of the last daily cycle. That put the count at 20 days for the last daily. However, once again, it's possible for the Dollar to print a higher high in the next couple of days, so we may get a lower low confirming the end of the last daily cycle. If that is our case, we can adjust the count to reflect the new low.

Until the dollar confirms a swing high or just finally gives up and breaks down, we have to assume we're in a new daily cycle. Let's sit tight and see how we open tomorrow after having a day off from the weather.