Cycle Trading

Pre-Summary

Backtest → former resistance tested + trend integrity

Following the prior breakout above 7150, stocks have now pulled back, forming a swing high and closing back below that level, triggering the stop referenced in the last update. From a cycle perspective, this pullback is occurring on day 19 of the daily cycle and is testing the integrity of the recent breakout. Price has so far found support at the rising 10 day moving average. Structurally, this is a backtest of former resistance, which is now attempting to act as support. The reaction at the 10 day moving average will be key in determining whether this remains a consolidation within an uptrend or transitions into a daily cycle decline.  

Failure to hold above 7150 introduces some near-term uncertainty and suggests the breakout is still in the process of being validated. A close below the 10 day moving average would signal the daily cycle decline.   

However, stocks remain in a daily uptrend while still holding above the 10 day moving average.  If stocks form a swing low and reclaim 7150 with a close back above that level, then the daily uptrend would resume and signal a cycle band buy signal. If price closes below the 10 day moving average, then the daily cycle decline would be underway.

Cycle Alignment

Bullish