If you are new to the concept of using Cycles for market timing, sometimes a picture is worth a thousand words.
So lets look at a weekly chart on Gold since the 2011 top which shows the tremendous struggle it is undergoing to prove the long Bear Market has ended. My chart below is a weekly that only has one moving average, the 66 Weekly EMA.
Note how in Stage 2 Bull Phases the 66ema clearly provides support near major Intermediate Cycle Lows (ICL). Also note how the 66ema, in Stage 4 Bear Phases, provides resistance at Intermediate Cycle Highs.
The chart also has many arrows on it. Each arrow shows a 5-6 month Intermediate Cycle Low (which are major buying opportunities to go long, even in Bear Markets). The Red Arrows show Intermediate Cycles which are Left Translated and Fail by making a Lower ICL than the previous ICL. Blue Arrows show Intermediate Cycles which are Right Translated and make a higher ICL than the previous ICL. For reference, here is a link to my Cycles 101 Terminology:
Added: From the comments section, I have added this additional info to observe about the chart.
Notice that from 2013 to late 2015, at all the uptrends right after an ICL arrow seem to top out near the 2 month mark. From a Time perspective, this gives Price more Time (i.e 3 months) to move lower and make a lower ICL.
What you can clearly see on the charts out of each ICL during this period, is two peaks in the uptrend phase lasting about two months, followed by 3 months of downside action. The two peaks are the shorter Trading Cycle 1 (TC1) and TC2 Highs where the the TC2 high is also the longer Intermediate Cycle High. This is classic Bear Market cycle action where most of the Intermediate Cycles are Left Translated in terms of Time (i.e. the Cycle High is to the Left of Center in terms of the total Time of the Cycle).
For the Bull Market to resume, we want to see the Intermediate Cycle start to make their Highs in Trading Cycle #3 (or later as it did in the first half of 2016). A TC3 high averages out to 3 to 3+ months into an IC High, leading to a Right Translated Cycle where Price does not have enough Time to make a Lower ICL.
Monday will be day 6 of Gold’s third Trading Cycle (TC) out of the December 2016 Yearly Cycle Low (YCL). Gold’s longer 5-6 month Intermediate Cycle usually has four shorter Trading Cycles within it (sometimes 3 or 5 but usually 4 shorter Trading Cycles). Next week’s price action will be critical in determining if we will see a higher high in this Intermediate Cycle (IC) or just a secondary high that will set the IC downtrend line into the next IC Low which I am expecting in the May/June timeframe. Based on my cycle work, I do believe the Gold Bull has resumed, however, the transitions from Bear to Bull markets are typically epic battles that take time to play out.
Wth that as background, third Trading Cycles have been pivotal for Gold over the past 5 years as the only bullish 3rd short term Trading Cycle I can find on the charts over this period was during the first 6 months of 2016 out of the December 2015 YCL. That 3rd TC topped on day 17. Other than that one, my chart work shows that every other 3rd Trading Cycle since the 2011 ATH topped on or before day 11 (many topped on or before day 9). My intent here is not be be overly bearish going into next week but rather to provide you with the best guidance I can based on recent cycle history. This post shows the potential transition from Bear to Bull in the Gold market but you can see that it is still a work in process as we enter next week.
This weekend, I will focus on Weekly charts for a longer term perspective. From a daily chart outlook, I don’t have much to add to this post from late last week.
Again, Gold is on day 6 on Monday, and the following Monday would be day 11. I will be watching closely for topping action especially since the USD is deep in its timing band to find a short term Trading Cycle Low. That said, the USD’s TC’s have been running longer than the normal timing band lately so we could see some more downside action in the days ahead.
My last chart is a weekly on the USD since last May’s Yearly Cycle Low (YCL). Note that Price is nearing the 30weam where the dollar has found support at recent lows. Remember that a rising 30ema on the weekly that supports price at major lows is bullish (Classic Weinstein Stage 2 Bull market price action).