Cycle Trading

Tuesday was day 17 for the daily Natgas cycle. That places Natgas in the early part of its timing band for a daily cycle low.

After crawling along the 50 day MA, Natgas closed below it on Monday. It then delivered bearish follow through on Tuesday to close below the 10 day MA, confirming the daily cycle decline. Something to watch out for is that the previous daily cycle was quite stretched at 43 days. Since often times a stretched cycle is followed by a shortened cycle, Natgas could from a DCL over the next few days.

As discussed in The Weekend Updates I believe that the June low was an intermediate cycle low, indicating that Natgas has begun a new intermediate cycle. The bullish RSI pattern that is emerging aligns with an advancing phase of a new intermediate cycle. And if I am correct that Natgas has begun a new intermediate cycle then once RSI becomes oversold it should quickly reverse. So if we see RSI become oversold and reverse quickly, that would be our signal that Natgas is in an advancing phase of a new intermediate cycle and has begun its second daily cycle.