Is Oil Ready To Cross The Line?

Oil ran into resistance at the 200 day MA last week on day 17. Oil then formed a swing high on and lost both the 10 day MA and the 50 day MA on to signal that the daily cycle decline has begun.

Oil printed it s lowest point on Thursday, day 20, which is early for a DCL. Oil should have continued lower for another 2 to 4 weeks before printing its daily cycle low. But oil delivered a bullish surprise on Friday by forming a swing low and recovering the converging 10 day MA and the 50 day MA. Oil then delivered bullish follow through by retesting the 200 day MA again on Monday.

Oil is currently in a daily uptrend. There is a bullish RSI pattern beginning to emerge. And there is a bullish crossover on the TSI. If oil closes above the 200 day MA we will label day 20 as the daily cycle low.

Overhead Resistance For Oil – Revisited

Last week when we looked at oil we discussed two points.
1) That oil looked like it was beginning a new daily cycle.
2) The intermediate cycle set-up gave us the expectation that oil has begun its intermediate cycle decline.

Oil has closed above the declining trend line and the 10 day MA so we can label day 40 as the daily cycle low. However as we discussed last week the peak on week 6 sets oil up for a left translated weekly cycle formation. There is a bearish RSI pattern beginning to emerge on the daily chart that is associated with the declining phase of an intermediate cycle. And oil has begun to close below the lower daily cycle band. This indicates that oil is in a daily downtrend and is another signal that oil has begun its intermediate cycle decline.

Overhead Resistance For Oil

Oil appears to be in the process of emerging from its daily cycle low.

Oil printed its lowest point on Thursday, day 40, placing oil late in its timing band for a daily cycle low. Oil formed swing low on Friday then breached the declining trend line on Monday to signal a new daily cycle.

The weekly chart shows us that oil is currently below the 50 day MA, the 10 day MA and the 200 day MA. So even though oil appears to be beginning a new daily cycle, the peak on week 6 followed by closing below the triple resistance level indicates that oil has begun its intermediate cycle decline. This sets up an expectation for the new daily cycle to left translated so oil can continue its intermediate cycle decline. Currently, oil is in a weekly downtrend. Oil will remain in its weekly downtrend until it can close back above the upper weekly cycle band.

Oil Runs Into Resistance

Oil ran into resistance on Wednesday.

Oil has been rallying out of the day 44 DCL. Oil did manage to close above the 200 day MA on day 4 only to lose it the next day. And since day 4, oil has been contained by the dual resistance of the 200 day MA and the 50 day MA. The bearish reversal that formed on Wednesday indicates that oil has being rejected by the dual resistance from the 200 day MA and the 50 day MA. Oil formed a swing high on Thursday and closed below the 10 day MA to set up a left translated daily cycle formation. Oil is currently in a daily downtrend. Since oil formed its swing high below the upper daily cycle band, oil will remain in its daily downtrend.

Bearish Signs For Oil

Oil formed a bearish reversal on Thursday.

Thursday was day 25 for the daily oil cycle, placing oil 5 days shy of its timing band for a daily cycle low. The are bearish divergences developing on the oscillators, which often precede a cycle decline. The new high on day 25 assures us of a right translated daily cycle formation. Thursday’s bearish reversal does ease the parameters for forming a daily swing high. A break below 60.14 will form a daily swing high. Then a close below the daily cycle trend line will confirm the daily cycle decline. Currently oil is in a daily uptrend. If a swing low forms above the lower daily cycle band then oil would remain in its daily uptrend and trigger a cycle band buy signal.

Oil Testing Triple Resistance

After peaking on day 18, oil printed a huge bearish candle that closed below triple support of the 200 day MA, the 50 day MA and the 10 day MA to signal the daily cycle decline.

But then oil did not deliver any bearish follow through.

Oil printed its lowest point on day 20. A swing low has since formed which allows us to construct the daily cycle trend line. A break below the trend line will confirm the daily cycle decline. However it appears that oil is beginning to coil below the triple resistance area. RSI has turned higher and the True Strength Indicator is close to delivering a bullish crossover. We also need to keep in mind that oil has just begun a new daily uptrend and is still early (week 5) in its intermediate cycle. Therefore a close above the 200 day MA will continue the daily uptrend and should result in a trending move.

Natgas Joins The Party

The commodities appear to be emerging from their multi year cycle lows.

The Miners printed their multi-year low in September, 2018. Oil did so in December, 2018 and the Industrial Metals (GYX) printed theirs in January, 2019.

June is month 39 for the multi year Natgas cycle, which does place Natgas in its timing band for a multi year low. And there is a bullish monthly reversal forming.

The triple leverage fund UGAZ had record volume signaling a capitulation low.

And Natgas formed a daily swing low that was very deep in its timing band for a daily cycle low. A close above the 10 day MA will signal a new daily cycle and will likely mark the multi year Natgas Low.

Oil Confirms New Daily Cycle

Oil printed its lowest point on day 21. Even though oil formed a swing low 2 days later, it has been contained by the declining 10 MA and had not yet confirmed a new daily cycle — until Tuesday.

The decline into the day 21 low caused the 10 day MA to drop steeply. The past 8 trading days oil was contained by the 10 day MA which allowed the 10 day MA to flatten out. Then on Tuesday, oil closed convincingly above the 10 day MA and the declining trend line to confirm that day 21 hosted the daily cycle low. In the Weekend Report I plan to discuss how I believe that not only did oil form a daily cycle low, but a weekly and yearly cycle low as well.

Seeking Oil’s Daily Cycle Low

Oil printed its lowest point on day 21. Even though oil formed a swing low 2 days later, it has been contained by the declining 10 MA and has not yet confirmed a new daily cycle.

The decline into the day 21 low caused the 10 day MA to drop steeply. After declining for 2 months oil seems to be forming a base which is allowing the 10 day MA to flatten out. The bullish divergence developing on the oscillators indicate that day 21 was an early DCL. A close above the 10 day MA and the declining trend line will have us label day 21 as the DCL. A break above 53.05 will confirm the new daily cycle.

Oil Slips Lower

Oil formed a daily swing high on Thursday.

Thursday was day 33 for the daily oil cycle, placing oil in its timing band for a daily cycle decline. So Thursday’s swing high has good odds of developing into the daily cycle decline. Oil currently sits on support from the top of the recent trading box and the accelerated trend line. A close below this level should send oil to seek out its daily cycle low. Oil should break below the daily cycle (blue) trend line in oder to complete its daily cycle decline. The peak on day 31 locks in a right translated daily cycle formation which has us expecting a higher low to form. Which aligns with oil being in a daily uptrend. If a swing low forms above the lower daily cycle band then oil will remain in its daily uptrend and trigger a cycle band buy signal.