Cycle Trading

Oil printed its lowest point on week 18, following the week 7 peak. While 18 weeks is a bit early to expect to see an intermediate cycle low, the weekly swing low and bullish follow through indicate otherwise …

Oil consolidated in a narrow trading range over 11 weeks before declining into the week 18 low. Normally a break out of a narrow range yields a trending move. But the move lower was halted by the 50 week MA, which has also stopped the previous 2 intermediate cycle declines. This has me suspicious that the move lower was a fake out move. And now we see that the the weekly TSI has formed a bullish crossover after emerging from a level that has marked the previous yearly cycle low.

If oil is still declining into its intermediate cycle low then it should be turned back at the declining weekly trend line. However a bullish break above the declining weekly trend line will signal that week 18 did host an early intermediate cycle low. We also need to recognize that oil established a weekly uptrend by closing above the upper weekly cycle band before it began its intermediate cycle decline. And oil remains in its weekly uptrend since it not close below the lower weekly cycle band as it declined into the week 18 low.