Tuesday, October 26, 2010

Recent US Dollar and Gold Daily Cycles

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I thought some may find it interesting to visually see the previous four daily cycles of both the US Dollar and Gold, and so I made this chart.  You will notice that the daily cycles of the US Dollar and Gold are usually both between 20 - 28 days and that they closely, but not perfectly, align with each other.
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I have placed a little green star above each day that represented the top of a daily cycle. Normally, this top will either be left or right of center.  For example, a daily cycle that measures 24 days would be considered left translated if it topped on day 7 and right translated if it topped on day 16.
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Bearish weekly cycles are made up of several of these smaller daily cycles which, themselves,  top to the left of center.  
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Bullish weekly cycles are made up of several of these smaller daily cycles which, themselves,  top to the right of center.  
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As one would guess, a bearish weekly cycle tops left of the center point of its cycle.  And, a bullish weekly cycle will top right of the center point of its cycle.
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The new US Dollar weekly cycle, which will likely consist of 4 daily cycles and last approximately 20 weeks, topped in a mere 12 days.  This is EXTREMELY left translated and EXTREMELY bearish.  Notice how each US Dollar daily cycle has also been extremely left translated.
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The first two daily cycles of gold's new weekly cycle have been EXTREMELY right translated and that is EXTREMELY bullish.  Incidentally, the Gold weekly cycle, like the US Dollar, is also about 20 weeks long.
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We have now begun the third daily cycle for both the US Dollar and Gold within the new current weekly cycle identified on the chart.
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The US Dollar has already topped out in 3 days - which is extremely left translated and very bearish.  Meanwhile, Gold is just getting started with three up days in a row.
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My best guess is that the current daily cycle for Gold will not only be bullishly right translated, but it will likely be semi-parabolic in contrast to the US Dollar which has already peaked and will be falling for most of the rest of this daily cycle.
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Click on the chart to ENLARGE

6 comments:

  1. Thanks so very much for the chart and all you do for your readers, John.

    joe

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  2. John,

    I am not yet convinced the dollar has topped in this correction. But I think this week will confirm the direction of the near term trend. The Dollar is strong today, Wed.

    joe

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  3. Hi John, does todays downswing in gold change your current short term outlook? thanks.

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  4. Joe - thanks for expressing your appreciation. I do the best I can with the time that I have.

    Anon - neither the US Dollar swing high of 78.32 nor Gold's swing low of 1315 were taken out today, so I view this day as basically a non-event. But it was an exciting day to watch and I was only able to catch glimpses of the action every hour or two.

    Philosophically, I believe that the great gold bull market will do anything and everything to throw off as many riders as possible. So I tend to view a day like today in that light.

    Usually a person has to do what seems to make sense to no one else to outperform the market so I am still optimistic that the maximum number of people bailed out today and tomorrow will be another day.

    If on another day gold breaks below 1315, then yes, I would be concerned about that as the implication would be that the current daily cycle of gold has failed and become left translated. Left translated cycle are usually not nice to bulls. So if that day should arrive I will have a new set of data to work with and new decisions to make.

    However, I will say this. As far as I am concerned, gold is in a secular bull market and so positions held that go under water will become profitable with time. Each person will have to determine their tolerance for draw downs and act accordingly.

    Thanks for your question!

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  5. John, this last post was most instructive. You have indicated in the past your full time job as a teacher. Is that like HS or something? I have been messing with the markets for many years and I'm amazed how you have simplified this aspect of technical analysis. People pay big bucks for this kind of information. I would love to help your crusade. If you have an e-mail I have missed it. Would love to talk. BTW your insight on Franco Nevada seems to be materializing now.

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  6. Thank you Rick for the appreciated compliments. My crusade, if I have one, is to help other people make money in the stock market trading precious metals mining stocks - nothing more. tsiTrader@gmail.com Drop me a line if interested.

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