Cycle Trading

On Wednesday morning, 11/23, we took a look at oil’s daily cycle.

We noted that if oil forms a swing high & loses the 50 day MA then oil would be forming a left translated daily cycle.

And that’s what oil did on Friday. Oil formed a daily swing high an lost 50 day MA last Friday which signaled a left translated cycle formation is developing. After backtesting the 50 day MA on Monday oil delivered more bearish follow through on Tuesday by breaking close to 4% lower and losing the 10 day MA in a clear and convincing manner. Going forward, a close below the lower daily cycle band will proved further confirmation that oil has begun its daily cycle decline.

Our cyclical expectation is that oil needs to complete its yearly cycle decline. A left translated weekly cycle formation aligns with that expectation. A failed weekly cycle is needed to confirm that the yearly cycle is in decline. With a peak on week 11, the weekly cycle is setting up to form as a left translated cycle. A break below 39.19 forms a failed weekly cycle and will confirm that oil is in a yearly cycle decline.