On Thursday we discussed the daily oil cycle. Thursday’s 4.79% drop threatened to cause a left translated daily cycle formation. After Thursday’s drop – if oil closed below the lower daily cycle band, that would also indicate that the intermediate cycle is in decline.
However, oil reversed on Friday.
Friday was day 15 for the daily oil cycle and oil delivered some bullish signals:
* Oil formed a bullish reversal off of support at the lower daily cycle band.
* Oil closed above the 50 day MA
* The RSI 05 reversed higher.
These are all signals of an advancing intermediate cycle. A close above 49.94 will form a swing low and mark a half cycle low. Then a close back above the upper daily cycle band will establish that oil is in a new daily uptrend.
This aligns with what is developing on the yearly cycle.
May is month 15 for the yearly oil cycle. Over the past 10 years, no yearly oil cycle stretched past 15 months, so oil is due for a yearly cycle low. But once a monthly swing low forms, it will signal that oil has begun a new yearly cycle.
And oil is currently forming a bullish monthly reversal. That will ease the parameters for forming a monthly swing low, which is a prerequisite for forming a yearly cycle low. Since May formed a lower low, the earliest a monthly swing low can form will be in June.
Oil is one of the sectors that I cover in the Weekend Report. I also cover the dollar, stocks, gold, the Miners and bonds in terms of their daily, intermediate and yearly cycles.
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