Loading ...Gold’s Yearly Cycle
Yearly Cycle lows (YCL) in any asset can be nasty affairs. Most assets have Intermediate Cycles that last 5-6 months in length as this seems to be the time needed for investor sentiment to swing from bearish, to bullish to bearish again.
A Yearly Cycle is typically two Intermediate Cycles (IC) but can sometimes be three, especially if one or more of the ICs are short. YCLs are also typically more severe than a normal IC Low.
My attached chart shows Gold’s two IC uptrends in Green and the Yearly Cycle uptrend in Blue. The CCI, MACD and Slow Sto all appear to be at or near ICL levels yet from a Time perspective, it is has only been 4+ months from Gold’s last ICL on May 31st. While Cycles are really more about investor sentiment, 4 months is short. That said, Golds ICL’s have been averaging around 5 months in length over the past several years. The first IC out of the Dec 2015 low lasted closer to 6 months and often times long cycles are followed by short ones.
The key here is my Red IC downtrend out of the early July IC High. We are close to a shorter term Trading Cycle Low here (some call them Daily Cycles) but for the IC Low to be confirmed Price must break above my red IC downtrend. Otherwise the IC Low may still be ahead of us in either late Oct or mid November.
Added: There are no hard rules on either time or price but a YCL is always a more severe low than the previous ICL. To illustrate this, I have added a second chart showing Fib level retracements for Gold’s two Intermediate Cycles. Note that the May ICL has a Fib 38% level and the current move into the current IC Low has already exceeded the 62% Fib level thus far.
Added: GDX and Silver Yearly Cycle charts.
In case you missed the significace of my Cycle posts on Monday, Oct 3rd, here they are for reference that a cycle low was very likely upon us. Perhaps I was too subtle for some.
On Gold:
https://goldtadise.com/?p=382876
On Dust:
https://goldtadise.com/?p=382839
Thanks Surf…beautifully explained
So would you expect the price to go below the May Low to confirm a yearly cycle low ?
Fully, Not necessarily as there are no real hard and fast rules with respect to either Price and Time. Usually, however, the YCL retracement is more severe than the previous IC Low. I have added a 2nd chart to illustrate this showing Fib levels.
Fully, also note how Gold, thus far, has found support at the 450 daily EMA (same as your 20 monthly EMA). So we could see an ICL soon or we could bounce into yet another Trading Cycle that rolls over into a final YCL down to say the 1200-1220 level in the late Oct to mid Nov timeframe.
The Key is my Red IC down trend line. This must be breached to confirm a new Intermediate Cycle. Until this happens, we may see a lower low.
Hope this helps. Time will Tell. 😉
Good posts Surf. Savage says the ICL on May 31 probaly wasn’t an ICL since the trend line wasn’t broken and we are probably in the ICL right now. Do you think his interpretation could be correct and if so what then? Thanks for all your great posts!
Hi Mike, Not every Cycle guy has the same views or lines (same with EW analysts). That said Cycles are as much about Time as they are about Price and Trend Lines. I have seen Gary’s post and Video but how could you not connect your trend line to the May Low even if it was not an ICL. This does not make any sense to me at all. If he had, he would have noticed that the YCL line was being broken and tested in late September before the last Trading Cycle rally that failed at my Red IC downtrend line.
The breakdown of the YC uptrend in late September was a warning shot across the bow and the move up was just the market shaking out anyone who was short, IMO.
Trend lines in Cycles are important but they must also be drawn correctly. Gary clearly understands cycles but I find his attention to trend lines sometimes a bit sloppy. He also has a very different approach to Cycles from a Time perspective. May was an ICL in my book for many reasons: Time, IC uptrend break, the last short term Trading Cycle failed and we had a 38% retrace, plus the oscillators I track signaled one as well. A mild ICL perhaps, but an ICL none the less.
Lastly, I draw my key cycle trend lines on Stock charts first so I can post them but I also put all of them in my live, real time, trading station at Schwab. I don’t have to draw anything to see what is happening and I can see Price interacting with these lines that I drew, in some cases, months or even years ago (eg. down trend lines from the 2011 top).
BTW Mike, I see the same pattern happening on the DOW Yearly Cycle trend line in my other post today. The DOW YC uptrend has clearly been breached and backtested over the past week or so. On Friday it closed below that YC uptrend for the first time….
Lets see what unfolds next week but I spent the last week clearing the deck on most remaining stock market longs and added to my SPXU short position that I started earlier in the week. 😉
Thanks for the reply, Surf. Always enjoy reading your work!