Stocks formed a swing high and closed below the 10 day moving average on Thursday, calling into question whether day 20 was truly the daily cycle low (DCL).
On Friday, stocks initially broke below the 50 day moving average, which would have suggested the daily cycle decline was still unfolding. However, buyers stepped in, allowing stocks to recover and close back above the 50 day moving average.
Stocks are now caught between the 10 day moving average and the 50 day moving average. This is a compression zone where momentum often pauses before the next directional move.
Stocks remain in a daily uptrend.
- A close back above the 10 day moving average would signal a cycle band buy signal, indicating continuation of the daily uptrend and affirming day 20 as the DCL.
- But a close below the 50 day moving average would extend the daily cycle decline — making Friday day 25, not the DCL.
With both moving averages pressing in, the resolution of this range should clarify the status of the daily cycle.
Cycle Trading 
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