Cycle Trading

Bonds formed a swing low on Thursday.

The daily bond cycle peaked on day 7 and as it breached the 200 MA. It formed a swing high and declined, printing its lowest point on Wednesday. Today bonds formed a swing low along with a break of the declining trend line to signal a new daily cycle. Wednesday was day 15, which is 3 days shy of the normal timing band for a daily cycle low. But the bullish crossover and bullish divergence on the True Strength Indicator strengthens the case that this is an early daily cycle low. A clear and convincing close above the lower cycle band confirms a daily cycle low.

If a new daily cycle is confirmed, it could also signal a new yearly cycle.

The yearly cycle peaked on month 13. A monthly swing high did not form until month 15. And a break of the monthly trend line did not occur until month 17. Bonds have now printed their lowest point in June, since peaking in month 13. June is month 18 for the current yearly cycle. The normal yearly bond cycle usually runs from 8 to 13 months so at 18 months the yearly cycle is stretched. Therefore a new daily cycle could trigger a new yearly cycle as well. A monthly swing low is needed to form a yearly low. A break above 122.38 forms a monthly swing low.