Cycle Trading

Pre-Summary

Several markets entered this week with important cycle questions still unresolved. While Stocks and BTC are testing their recent daily cycle lows, Oil is doing something different — it is breaking out to a new daily cycle high.

Oil entered this week in a daily uptrend after consolidating below resistance.

On Tuesday, Oil broke bullishly out of consolidation and moved above its previous daily cycle high. This indicates a continuation of its daily uptrend and signals a cycle band buy signal. More importantly, the breakout shifts the odds towards a right translated daily cycle formation. That distinction matters.

A right translated cycle peaks after the midpoint of the cycle. In an uptrend, that is what we want to see. Price spends more of the cycle advancing than declining, providing evidence that buyers remain in control.

Other markets are providing a different type of evidence. Stocks have moved back below the 10 day MA and are developing a triangle consolidation, calling the recent day 24 DCL labeling into question. BTC is also struggling with resistance at the 50 week MA and has moved back below its 10 day MA, challenging the day 32 DCL interpretation. Oil does not currently have that problem. Instead of testing whether a recent cycle low will hold,

Oil is breaking out to a new daily cycle high. The cycle framework gives us expectations. 

Price tells us whether those expectations are being met. For Oil, the evidence currently favors continuation.

Current Framework

Trend: Daily uptrend.

Cycle: New daily cycle high shifts the odds towards a right translated daily cycle formation.

Next Trigger: Bullish follow-through strengthens the continuation signal.