Cycle Trading

Summary

• Miners broke above 85 resistance on Thursday but failed to hold the level
• A close back below 85 on Monday formed a short-term swing high
• Price is stretched above the 10 day moving average, favoring consolidation
• A close below the 10 day moving average would signal a daily cycle decline
• Holding above 85 and forming a swing low would keep the daily uptrend intact

The Miners had been contained by the 85 resistance level — until Thursday.

On Thursday, the Miners broke above 85, signaling a potential continuation of the daily uptrend. That breakout was followed by a backtest on Friday. However, the Miners were unable to hold above resistance and closed back below the 85 level on Monday, forming a short-term swing high.

At the same time, the Miners are currently stretched above the 10 day moving average. That stretch raises the odds that price may need to consolidate in this area to allow the 10 day moving average time to catch up. A period of consolidation near former resistance would not be unusual at this stage of the cycle.

That said, the risk is clearly defined. A close below the 10 day moving average would signal the daily cycle decline, which would place Monday as day 34 of the current daily cycle.

For now, the Miners remain in a daily uptrend. If they can form a swing low and reclaim the 85 resistance level, that would indicate a continuation of the daily uptrend and trigger a cycle band buy signal — in which case we would label day 29 as the daily cycle low.