Cycle Trading: Spain on Edge
|The IBEX has been steadily trending lower for the past 21 weeks.
The IBEX intermediate cycle typically averages 18 - 24 weeks from trough to trough. But the uncertainty of a possible Catalan secession has helped to stretch the current intermediate cycle out to week 42. So the IBEX is overdue to print an intermediate cycle low. The bullish weekly reversal off of support from the 200 week MA and the rising 50 week MA is setting up for a bullish resolution. A break above 10327.20 forms a weekly swing low. And then a break above the declining weekly trend line will confirm the new intermediate cycle.
Drilling down to the daily daily chart we can see that the IBEX delivered a clear and convincing close below the 200 day MA on Wednesday. But that is followed up by a bullish engulfing candle on Thursday. Thursday was day 20, placing the IBEX in its timing band for a daily cycle low. Thursday's bullish engulfing candle has eased the parameters for forming a daily swing low. A break above 10256.90 will form a daily swing low. Then a close above the 10 day MA will signal a new daily cycle. And with the intermediate cycle being overdue to rally into a new intermediate cycle, once a new daily cycle is confirmed, it should also signal that the IBEX is in a new intermediate cycle as well.
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