A Trader’s Guide to Timing the Gold Cycle

How Spotting Strength vs Weakness Can Transform Your Trades

Understanding how to read strength and weakness in price action is one of the most effective ways a trader can refine their edge in the gold market. While timing the perfect bottom or top is elusive, the ability to spot low-risk, high-reward entry zones through simple observation of market structure can shift your trading from reactive to strategic.

This guide explores how traders can approach the gold cycle, identify key moments of strength and weakness, and use that information to anticipate price reversals — not chase them. These concepts, though universal, are especially effective in the gold market, where momentum and sentiment often overextend in both directions.

Why Strength vs Weakness Matters

At its core, strength and weakness aren’t defined by whether price is going up or down — they’re defined by how price behaves in context. A strong move higher on increasing momentum followed by shallow pullbacks indicates demand. A weak rally that struggles to break prior highs, or a failure to bounce after a prolonged drop, signals exhaustion.

The real opportunity lies in watching what price fails to do.

• Failure to make lower lows after a sustained downtrend can be the first early sign of strength.
  
• Failure to break resistance after a rally often exposes underlying weakness.
  

By identifying these subtle shifts in market behaviour, traders can spot points where risk is lowest – often when price is still moving sideways or seemingly doing nothing. These quiet moments are where major moves begin.

Spotting the Cycle: The Four Phases

The gold market, like all markets, follows a cycle: downtrend, base, uptrend, and top. The most strategic entries typically occur at the end of the downtrend or early in the base, before momentum returns.

Key signs to watch for:

• Downtrend phase: Lower lows and lower highs. Avoid entries here.
  
• Basing phase: Price flattens, volatility contracts, failed breakdowns begin to appear.
  
• Uptrend phase: Higher highs begin forming, confirmed breakouts occur.
  
• Top phase: Stalling momentum, lower highs despite higher prices.
  

The most overlooked — and most profitable — phase is the base. During this phase, risk is low, stops can be tight, and price is often heavily discounted. Waiting for confirmation (such as a failed breakdown or reclaim of a prior range) improves the probability of success.

Using Charts to Your Advantage

In a recent episode of Talking Trades, Patrick Karim and Kevin Wadsworth of NorthStar & BadCharts (NSBC) share their insights on identifying strengths and weaknesses in gold price action. Industry-leading chartists and forecasters of NSBC discuss the subtle signals traders can use to recognise when a market is preparing to reverse. 

NSBC’s approach focuses on the power of price structure, where key moments of support and resistance offer high-probability entry points while highlighting the importance of visual simplicity. Many traders clutter their screens with indicators and signals, but real insights often come from a clean chart and a trained eye.

Here’s what to look for:

• Failed breakdowns below key support levels followed by swift recoveries.
  
• False rallies that can’t hold gains, revealing a lack of conviction.
  
• Repeated rejections at the same level, indicating growing pressure.
  

Each of these signals tells a story  – of buyers stepping in, or sellers losing control. Recognising these moments early gives traders the ability to enter before the crowd.

Timing with Patience

Rather than trying to predict every move, the smart trader waits. Patience allows confirmation to build. Once signs of strength appear – whether that’s holding a support level or breaking through resistance with volume – the setup becomes clear.

Gold is a market that rewards the prepared, not the impulsive. Whether you’re trading gold actively or positioning longer-term, learning to read the underlying strength or weakness of a move can transform your approach. It’s not about guessing where the market will go – it’s about spotting when the odds have quietly shifted in your favour.

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The opinions expressed in Talking Trades by Patrick Karim & Kevin Wadsworth from NSBC do not purport to reflect the official policy or position of Kinesis. The Talking Trades series is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service. 

This publication does not intend to provide investment advice, tax or legal advice on either a general or specific basis. Viewers are encouraged to seek independent financial advice before making any investment decisions.