Cycle Trading

Summary

• Stocks signaled a daily cycle decline last Wednesday but failed to follow through
• The 10 day MA did not turn lower, weakening the bearish setup
• A bullish reversal formed on Friday
• Stocks formed a swing low and reclaimed the 6900 level on Monday
• Bullish follow-through on Tuesday confirmed strength
• A new high on day 28 confirms a right-translated daily cycle
• Right translation aligns with a healthy daily uptrend
• Breakout signals a cycle band buy signal
• 6900 becomes key support / stop level

Stocks closed below the 10 day MA last Wednesday, signaling the start of a daily cycle decline. However, stocks failed to deliver the bearish follow-through needed to complete the decline. Notably, the 10 day MA never turned lower — a key requirement for a daily cycle to fully roll over.

Instead, stocks formed a bullish reversal on Friday. That reversal led to a swing low and a close back above the 6900 resistance level on Monday. Stocks then delivered bullish follow-through on Tuesday.

The breakout to a new high on day 28 locks in a right-translated daily cycle formation. Right translation confirms strength and aligns with stocks being in a daily uptrend.

Forming a swing low and breaking out to a new all-time high indicates a continuation of the daily uptrend and signals a cycle band buy signal.
Stops can be placed at the 6900 level.