Cycle Trading

On Monday we discussed that a break below the (red) trend line would send the Miners into a daily cycle decline.

The Miners printed their lowest point on Tuesday, which was day 55, placing them late in their timing band for a daily cycle low. The Miners formed a swing low on Wednesday, off of support from the 50 day MA. The Miners then delivered bullish follow through on Thursday to signal a new daily cycle. A close above the 10 day MA will have us label day 55 as the DCL.

Long positions can be entered with the stop being placed below Tuesday’s low. Until the Miners break above the upper trend line there is a risk of being whipsawed as the Miners continue to work through the multi month consolidation. Waiting on a break above the declining trend line will reduce the risk of being whipsawed at the expense of missing out on part of the potential rally.