Sunday, December 11, 2011
Gold's Secular Bull Daily and Weekly Cycles
I have been working on several projects involving writing script for use on the ThinkorSwim platform for weeks and weeks. Tonight I would like to post one of the projects that is completed.
This is a collage of 4 charts which very accurately identifies each of gold's daily and weekly cycles since the inception of it's secular bull market in February 2001. The small blue arrows point to each daily cycle low. The larger orange arrows identify the weekly (intermediate) cycle lows. Green dots identify the daily and weekly cycle highs that are within a right translated cycle, while red dots identify those within a left translated cycle.
In attempting to make sense of where we are at present, please note that each C-wave top throughout this secular bull has been followed by a weekly cycle that was left translated. I believe that we are presently in that type of situation, with the $1923.7 high achieved earlier this past fall as a C-wave top and the $1507 intraday low in latter September beginning our current weekly cycle.
If I am correct, the high achieved in early November will prove to mark the high of this left translated weekly cycle (ie. we will not see $1800 gold until well after this weekly cycle bottoms). My best guess is that the current weekly cycle will bottom sometime in February.
If, by chance, the September low is breached that would suggest we are in a continuing D-wave. Indeed, the early 2004 and 2008 C-waves were followed by left translated weekly cycles that "failed" to hold their Day 1 price level. But for now I am satisfied to entertain the notion that we are in a normal A/B-wave phase and that price will hold above the $1500 level into February.
Some other things I am writing the computer code for include the True Strength Index (TSI) indicator BUY/SELL signals of gold's secular bull market which will appear as an indicator directly below the price chart you see, and an adaptation of the script that allows for stocks/ETF's to be compared with gold's cycles and TSI BUY/SELL signals. One will be able to view a chart of, say, GDX or NUGT, and simultaneously have all of the cycles and TSI information of gold superimposed on that chart.
Another project I have nearly completed offers a precise analysis of the 4 hour cycles of gold. It turns out that each daily cycle of gold is made up of nested 4 hour cycles. These 4 hour cycles are usually around 40 bars (4 hour bars, of course). They are either left or right translated and provide some very interesting trading opportunities - not only for gold but also gold/mining related stock products such as GLD, GDX and so on. I look forward to beginning to trade this information soon and posting it for your observation and discussion.
Have a great week and I hope to get another post up within a week or so.