Cycle Trading

There have been constructive developments in both NATGAS and oil. Let’s begin tonights discussion with NATGAS.

We discussed here how things were lining up with NATGAS. Today NATGAS delivered a clear and convincing break above the decliing trend line which confirms a new daily cycle.

And with NATGAS being so deep in its weekly cycle, this new daily cycle will likely also mark the beginning of a new intermediate cycle. A new intermediate cycle should break above the lower weekly cycle band to confirm the new intermediate cycle. That is about a 30% move from the current level.

Oil printed its lowest point on Monday, December 14. Oil formed a swing low the next day but then was contained by the 10 day MA. Oil closed above the 10 day MA on Tuesday and then delivered bullish follow through on Wednesday by closing convincingly above the 10 day MA. Oil has delivered a bullish TSI zero line crossover and is on the verge of breaking above the declining trend line to confirm this as a new daily cycle.

Today’s move has caused oil to form a weekly swing low. Last week was week 16 for the intermediate oil cycle. Oil is shy of its normal timing band for an intermediate cycle low but the bullish divergence that is forming on the weekly True Strength Indicator is a signal that Oil maybe forming an early intermediate cycle low. We need to see a close above the declining trend line to confirm the new intermediate cycle. Such a move from this level would be about a 15% move from the current level.