Cycle Trading

The daily bond cycle peaked on day 29. A swing high formed two days later. Then bonds broke below the daily cycle trend line on day 32 to confirm the daily cycle decline.

Bonds formed a swing low last Thursday off the day 33 candle. Since 33 days places bonds deep in their timing band for a daily cycle low that swing low had good odds of marking the daily cycle low.

However, bonds broke lower.

Bonds delivered a bearish signal last week when they failed to follow through on a swing low deep in the timing band for a daily cycle low. Bonds delivered another bearish signal on Tuesday by closing below the lower daily cycle band. That ends the daily uptrend and indicates that bonds have begun their intermediate cycle decline.

Looking at the weekly chart we can see that bonds formed a weekly swing high last week. Bonds are delivering bearish follow through this week. Bonds also broke below the weekly trend line which is another signal that the intermediate cycle decline has begun.

A failed daily cycle normally ushers in the intermediate cycle low. Since the current daily cycle peaked on day 29, that locks in a right translated daily cycle formation. Bonds should begin a new daily cycle any day. Bonds will need for the new daily cycle to form as a left translated, failed daily cycle in order to complete the intermediate bond decline.