Cycle Trading

Oil continues to make higher highs.

Tuesday was day 11 for the daily oil cycle and oil printed another higher high.

The bigger picture is that oil is on month 13 for the yearly oil cycle. Which places oil in its timing band for a yearly cycle decline. Oil needs to form a monthly swing high in order to begin its yearly cycle decline. And since oil has made a higher high in July, the earliest a monthly swing high can form will be in August.

And while oil has been making higher highs’ The Energy Sector has been diverging. And I believe that the divergent energy is heralding the yearly cycle decline for oil.

July is month 11 for the energy sector. That places energy in its timing band for a yearly cycle decline. While oil did print a higher high in July, it appears that May was the yearly cycle peak for XLE. A monthly swing high is required to confirm the yearly cycle decline. A break below May’s low of 71.94 will form a monthly swing high.