Cycle Trading

The energy sector printed a bullish reversal last week.

Last week was week 22 for the energy sector’s intermediate cycle. That places the energy sector in its timing band for print an intermediate cycle low. A new daily cycle has started and this may also signal a new intermediate cycle. A weekly swing low is required to mark the intermediate cycle low. A break above 56.12 will form a weekly swing low. Then a close above the lower weekly cycle band will indicate a new intermediate cycle. The bullish divergence developing on the True Strength Indicator signals that not only is an intermediate low is imminent, but also a yearly cycle low.

The Miners have formed a weekly swing low. Last week was week 19 for the intermediate Miner cycle. The Miners have begun a new daily cycle and the weekly swing low signals that a new intermediate cycle has also begun. Once again there is a bullish divergence on the True Strength Indicator that signals not only has an intermediate low been left behind, but also a yearly cycle low.

And the reason for this I suspect is the dollar.

The dollar has been in a mini uptrend since emerging from the early December cycle low. The dollar printed an exhaustion candle on day 7 and appears to be rolling over. A bearish crossover has formed on the True Strength Indicator. A break below 98.99 will form a swing high. Then a break of the daily cycle trend line will confirm the daily cycle decline. A peak on day 7 has goods odds for a left translated cycle formation, which usually results in a failed daily cycle. A failed daily cycle will send the dollar into its intermediate cycle decline.

But I think something bigger is developing here for the dollar. I think that a failed daily cycle may also lead to the yearly cycle decline and the 3 year cycle decline. All of which I plan on covering in this week’s Weekend Report.