Monday 2/1/16

The monthly chart shows price in January making a lower high, lower low and lower close versus December, closing below the MM and MY MAs and the monthly and yearly pivots.  This is behavior indicative of being on the downside of the multi-year cycle.  Of more importance is whether price is still looking for its overdue MY low from the May MY high, or if price made an early, lower MY high in November and started searching for a new MY low.   If price is still searching for its overdue low, that low would likely be seen within the next few months or could even be behind us if last week's low was a multi-month low that double-bottomed with the August MM low.   If August saw a MY low followed by a premature November MY high, the next MY low would not be expected until year end.

The weekly chart shows price last week having made a higher low, higher high and higher close versus the prior week's candle.  Price early in this week's candle has opened above its weekly pivot and is thus far trading slightly below last week's close.  The behavior of price the last two bars is indicative of price being on the upside of the MM cycle, and indeed the MW MA has started to turn upward; it is important to note, however, that price could easily trade lower this week and erase that upturn of the MW MA by the candle's close.  

Last week was the projected date to see a multi-month high, and it remains unclear whether we are still searching for that MM high or if an early MM high was seen five weeks ago.  Either scenario is bearish, but if the MM low was seen two weeks ago it at least offers hope that the double-bottom of MM lows also marked a MY low, as discussed above.   If a MM high was seen five weeks ago, it is extremely unlikely that two bars ago was anything more than a multi-week low, and price should soon take out the lows in search of a MM low projected for 3/11/16. Under this scenario, the monthly pivot near 1926 would be expected to provide resistance to the rally.

The daily chart shows price last week riding MD MA support on the upside of the MW cycle and closing the week with a Friday high against new monthly pivot resistance.  We are overdue to see a MW high, and the monthly pivot would be a logical place for price to find resistance for this high.  Should we see one more multi-day cycle before finding the MW high, the pink MM MA would be the next logical resistance area.  When the MW high has been seen, price should break MD MA support and turn that average lower as it searches for the MW low projected for 2/11.  Bulls want to see a higher MW low than the 1/20 MW low in order to confirm the 1/20 low as a MM low.  Should we instead see a lower MW low, it would indicate the more bearish scenario discussed in the weekly chart commentary is in play.

The hourly chart shows price on Friday finding support on the 24Hr MA for its 24Hr low before the NY open.   It was mentioned in Friday's blog that price would then be free to stage a significant move up as price would be on the upside of the daily, MD and MW cycles.  Such a rally indeed unfolded, with price eventually finding its 24Hr high just above what would become the new monthly pivot.  Price has since traded lower as it searches for its 24Hr low which is projected for this hour.  If price is still on the upside of the MD cycle, the daily pivot just tested should provide support for the 24Hr low.

We are in the timeframe to see a multi-day high, however, and it is possible that Friday's high was the MD high.  If not, the next 24Hr high (projected for after the close today) would likely be the MD high.  When the MD high is in, price will break daily pivot/24Hr MA support and trade down to at least the weekly pivot and likely the MD MA.  If the MD high is also the MW high, a test of the MW MA near 1883 is likely to be seen by next week.