Looking at the big picture for spot gold, we see that the next cycle low is due in about 4 weeks. In other words, the current cycle that started at the end of December is about 85% complete.

That means that the strength off of yesterday's low at $1526.98 not only represented a deep retest of the December 29 low at $1522.48, it likely also satisfies the first coordinate in the next cycle bottoming period ahead of a new up-leg in the larger over-riding bull market in gold.

As long as the $1527/22 support zone remains intact as a viable and critical support plateau, my work indicates that I should view all of the action off of the September 6, 2011 high at $1921.50 as a completed intermediate-term correction ahead of the resumption of the longer-term bull trend.

That said, to trigger initial signals that a significant low has been established, spot gold must hurdle and sustain above $1590-$1602.

If something extraordinary unfolds that sends global equity flows into the last or only perceived safe haven market -- gold -- then perhaps we have to throw the cycle timing work, and any other "normal circumstance," out of the window while gold potentially explodes towards new high territory in a hurry.

Of course, such a situation is definitely an outlier.

By Mike Paulenoff

Mike Paulenoff is author of MPTrader.com (www.mptrader.com), a real-time diary of his technical analysis and trading alerts on ETFs covering metals, energy, equity indices, currencies, Treasuries, and specific industries and international regions.

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