March 29th, 2014
by Poly, Zentrader
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The Gold Cycle might be confusing to read, but there is no such lack of clarity with Crude. The current action makes analysis straightforward because we now have a textbook Cycle low in place. Very few Daily Cycles make it beyond 45 days, and this slightly longer Cycle was likely compensating for a shorter 1st Daily Cycle.
This deep in a Cycle, key reversals in price almost always turn out to be new Cycles. We have seen a solid Swing Low result in a clean break of the down-trend, and price end the week with a close above the 10dma. In addition, our technical indicators turned higher, perfectly supporting a new Cycle.
With a 3rd Daily Cycle now in play, we should be prepared to see at least 10 sessions higher before we entertain the possibility of a Left Translated Cycle. With normal Crude Investor Cycles, we typically see just 3 Daily Cycle span a total of 20-24 weeks. Excepting the last IC, which was an extended 32 weeks, all recent Crude Cycles have been reliably within that range.
My expectation is that the current 3rd Daily Cycle is likely to be the last of this IC. If that's the case, we need to allow room for the declining portion of the Investor Cycle by assuming a top in Crude by Day 15-20 at the latest. It is difficult to predict tops, especially since the last few Investor Cycles do not provide an overarching trend to lean on for support. Without a long term trend to guide our framework, we just don't know how deep the coming Investor Cycle Low is likely to be.
Editor's note: Oil traded up during the week, closing Friday at $99.87 for WTIC,pretty much where the author projected for the first five of his ten-day projected rally.