Cycle Trading

Summary

• Stocks broke below the 200 day moving average last week
• Day 42 placed stocks in the timing band for a daily cycle low
• Stocks formed a swing low on Monday
• Price ran into resistance at the 10 day and 200 day moving averages
• A close above both levels is needed to confirm a cycle low

Stocks moved into a daily cycle low timing window late last week, reaching day 42 as price broke below the 200 day moving average and extended lower. That type of move typically marks the later stages of a decline.

On Monday, stocks formed a swing low — the first step in building a potential daily cycle low. However, the key test came immediately after. Price rallied into the converging 10 day moving average and 200 day moving average, where it found resistance. This is an important level. When price breaks below a major moving average and then rallies back into it, that level often acts as resistance until proven otherwise.

What is clear is that the market is attempting to turn — but has not yet confirmed it.

From a cycle perspective, this is a classic decision point. The timing window supports a low, and a swing low is in place, but confirmation is still required. A close above both the 10 day moving average and the 200 day moving average will be needed to confirm that a daily cycle low has formed. That signal would also indicate a shift back into a daily uptrend. Until then, the daily downtrend remains intact, and resistance is still in control.

Cycle Alignment

The daily cycle is attempting to turn within a downtrend, with price testing key resistance levels.