Cycle Trading

Oil has been in a brutal downtrend.

The previous daily cycle was very stretched at 73 days. Then oil went on to print its lowest point last week on 12/24/18, which was day 16. Often times cycles will follow a stretched cycle with a shortened cycle, making it possible that day 16 hosted the DCL. The swing low that formed on 12/26 signaled a new daily cycle. Bullish divergences developing on the oscillators also suggest a shortened DCL. Oil closed above the 10 MA on Wednesday and then delivered bullish follow through on Thursday, turning the 10 day MA higher to confirm the new daily cycle. Oil should break above the declining trend line as it rallies out of its DCL.