Oil Confirms Daily Uptrend

Oil formed a daily swing low on Tuesday and closed above the declining trend line to confirm the new daily cycle.

As oil rallied into the previous daily cycle peak it began to close above the upper daily cycle band to establish a new daily uptrend. Oil managed to close above the lower daily cycle band as it printed its day 38 low. By forming a swing low and closing back above the upper daily cycle band oil confirms that it is in a new daily uptrend. And closing above the upper daily cycle band also delivers a cycle band buy signal. Oil will remain in its daily uptrend until it closes below the lower daily cycle band.

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The 4/06/18 Weekend Report Preview

The Dollar
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The dollar continued to close above the 50 day MA this past week.

The dollar formed a swing low the previous Wed & then closed 6 consecutive times above the 50 day MA, turning the 10 day MA higher, to confirm that day 26 hosted the DCL. The dollar is still in a daily downtrend. A close above the upper daily cycle band will end the daily downtrend and begin a new daily uptrend.

Stocks
stocks

Stocks printed their lowest point on Monday day 34, following the day 21 peak. That places stocks in their timing band for a daily cycle low. Thursday’s close above the declining trend line confirms a new daily cycle.

Stocks closed lower on Friday, dropping over 2% to retest the 200 day MA. At this point while we could still get more volatility, I do not expect stocks to break below the day 34 low therefore we will label day 34 as the DCL. Stocks are in a daily downtrend. They will remain in its downtrend unless they close above the upper daily cycle band.

I suspect that the rally out of the day 34 low will gain traction once oil prints its impending daily cycle low. (I cover oil’s daily, weekly, and yearly cycles in the Weekend Report)

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Oil Prices Slip

Oil formed a daily swing high on Tuesday.

Tuesday was day 31 for the daily oil cycle. That places oil in its timing band for a daily cycle decline. There are bearish divergences developing on the oscillators that ofter coincide with a cycle top. A close below the 10 day MA will signal the daily cycle decline. The peak on day 30 indicates a right translated daily cycle formation. Which means that our cyclical expectation is to see oil print a higher daily cycle low. However I have concerns that the developing on the weekly cycle that suggest oil still needs to complete its intermediate cycle decline, which I plan to discuss in the Mid-Week Update.

Pin Action

The dollar tagged the 200 month MA on Thursday.

The 200 month MA is a major support level. And with the dollar deep in its timing band for a daily cycle low, that has good odds to trigger a cycle low.

Thursday was day 40 for the daily dollar cycle. That places the dollar late in its timing band for a daily cycle low. Thursday’s bullish reversal off of support from the 200 month MA has eased the parameters for forming a daily cycle low. A break above 89.42 forms a swing low and signals a new daily cycle.

The dollar potentially printing its DCL has caused some pin action in other asset classes.
Precious metals was certainly one of the areas …

In real time day 27 looked as if it hosted a very mild DCL. I have been skeptical of a DCL label primarily due to the Miners not turning the 10 day MA lower. However, the bearish engulfing candle that formed on Thursday is much more likely to be the daily cycle top. A break below 23.98 forms a daily swing high. Then a close below the 10 day MA will signal the daily cycle decline.

And there is a similar set up with oil.

Since oil did not close below the 10 day MA on day 28 I believe that makes Thursday day 32 for the daily oil cycle. At 32 days, that places oil in its timing band to seek out a daily cycle low. Thursday’s bearish print eases the parameters for forming a swing high. A break below 65.08 forms a daily swing high to signal the daily cycle decline.

Oil Forms Bearish Reversal

Oil formed a bearish reversal on Thursday.

Wednesday’s bearish reversal eases the parameters for forming a swing high. Oil is nearing its timing band for a daily cycle low. A swing high and break of the declining trend line will confirm the daily cycle decline. A break below 63.43 will form a daily swing high.

Thursday was day 23 for the daily oil cycle. The new high on day 23 indicates a right translated daily cycle formation which aligns with oil being in a daily uptrend. Oil will remain in its uptrend unless it closes below the lower daily cycle band.

Oil Confirms New Daily Cycle

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The daily oil cycle peaked on day 32, formed a swing high, and then began its daily cycle decline. Oil printed it lowest point last Thursday, day 41, placing oil in its timing band for a daily cycle low.

Oil formed a swing low on Friday. Then it closed above the 10 day MA and the declining trend line to confirm that Monday was day 2 for the new daily cycle. Oil also closed above the upper daily cycle band, continuing in its daily uptrend. And the correct strategy in an uptrend is to buy the dip.

However the longer term picture suggests to proceed with caution.

Oil has now entered the 4th daily cycle for the current intermediate cycle. This is week 25, which places oil in its timing band to seek out an intermediate cycle low. So while our expectation would be to see this new daily cycle form as a left translated, failed daily cycle oil could still rally for 2 to 3 weeks and still form as a left translated daily cycle.

Oil Signals A New Daily Cycle

Oil printed its lowest point on Monday, which was day 25. That is 5 days shy of the normal timing band for a daily cycle low. However, oil is giving every indication that a daily cycle low has formed.

The decline into the day 25 low caused oil to deliver a 50% fib retracement, which we can see at a DCL. Oil then formed a swing low on Tuesday and delivered more bullish follow through on Wednesday causing oil has closed back above the 10 day MA. Oil also has closed above the upper daily cycle band to indicate that it continues in its daily uptrend. Oil will remain in its daily uptrend unless it closes below the lower daily cycle band.

Oil Delivers A Buy Signal

Oil delivered a buy signal on Thursday.

There is a little uncertainty if day 23 represents an early DCL or was it a half cycle low. However what is certain is that oil had been closing above the upper daily cycle band prior to this dip into the day 23 low. Oil formed a swing low and closed back above the upper daily cycle band on Thursday to indicate that oil remains in it its daily uptrend. And a swing low in a daily uptrend is a buy signal. Oil will remain in its daily uptrend until it closes below the lower daily cycle band.

Oil Confirms Daily Cycle Decline

On Thursday we discussed how the bearish reversal was setting oil up for a decline into its daily cycle low. On Monday oil confirmed that it has begun its daily cycle decline.

Oil formed a swing high on Monday that closed convincingly below the 10 day MA. Oil also pierced the daily cycle trend line. Both of these signals indicate that oil has begun its daily cycle decline. With Monday being only day 21 that will allow enough time for oil to drop further so as to turn the 10 day MA lower.

Oil still managed to close above the upper daily cycle band, indicating that oil is in a daily uptrend. Oil will remain in its daily uptrend unless it closes below the lower daily cycle band.

Oil Slips

Oil formed a bearish reversal on Thursday.

Thursday was day 19 for the daily oil cycle. The new high on day 19 does begin to shift the odds towards a right translated daily cycle formation. However, the bearish reversal has eased the parameters for forming a daily swing high. A break below 51.22 forms a swing high and then a break below the daily cycle trend line will confirm the daily cycle decline. Oil is in a daily uptrend and will remain so until it closes below the lower daily cycle band. A daily low forming above the lower daily cycle band would be a buy signal.