Cycle Trading

Oil formed a swing low on Monday.

Oil printed its lowest point on Friday, following the day 15 peak. Friday’s bullish reversal eased the parameters for forming a daily swing low. Since 31 days places oil in its timing band for a daily cycle low, the swing low that formed on Monday signals a new daily cycle. A close above the 10 day MA will confirm the new daily cycle.

So while Friday has good odds of marking the daily cycle low, the question is if Friday also marks the intermediate cycle low. The formation of a weekly swing low would signal a new intermediate cycle. A break above 49.32 would form a weekly swing low.

But even if oil forms a weekly swing low, oil has not delivered a failed intermediate cycle. Since oil is in its timing band for a YCL, I would like to see a failed weekly cycle to complete the yearly cycle decline. Therefore oil would need one more failed daily cycle in order to form a failed weekly cycle. If that happens that would extend the yearly cycle decline by another 5 to 7 weeks.

But for now, it does look like a daily cycle low has formed. Next, a break above 49.32 would form a weekly swing low. Then if oil closes above the upper daily cycle band that would swing the odds in favor of this being a new intermediate cycle.