Cycles, trends and fracture formation




Yesterday I sent my free newsletter subscribers a lesson I wrote a few years ago on what I call PAUSE training. The reason was that a market in which you shared the future cycle rotation data has formed the early warning signal for a PAUSE formation and may present a marketing opportunity. At least, it should help them interested in learning more about turns, gear changes, pivot points and other phenomena associated with cycling. The better you understand a tool or indicator, the better you can use it.



PAUSE training is straightforward to identify. But first, I must discuss what to look for to determine a POTENTIAL BREAK formation. Who will take care of the movement after the fact, unless you have a warning?



Let's start with the basics. When it comes to market cycles, it should be understood that market patterns are the result of the cumulative effect of multiple processes. To keep it simple, let's call each length of time a unique bike that has its frequency and size. Yes, it's hugely simplified, but it should help new processes entirely.
If you look at a MONTHLY price catalogue with each price bar representing a full month of trading, you will see a LONG TERM view of the market in question. We'll call the market OR.



If we look at the MONTHLY GOLD chart, you can see that the prices have increased every month. So you could say that the LONG TERM cycle is moving forward at this point. Easy to see, right?



If we watch the WEEKLY GOLD chart, where each price bar represents a full week of trading, we can see new highs are being made every week. So let's assume that the INTERMEDIATE-TERM cycle is also progressing.



On the DAILY chart, in which each price bar represents a single trading day, we can see that the price has pulled back (down) from the recent high of 01/20/06. Minimal recoil, mind you, but the steering keeps going down. We could therefore say that the SHORT TIME cycle is oscillating downwards.



Can you imagine that? It helps when you can.



Now consider that the LONG TERM cycle has more power than the INTERMEDIATE TERM cycle. And the INTERMEDIATE TERM cycle has more power than the SHORT TERM cycle. And everyone is working and doing their thing at the same time.



If the LONG TERM cycle is increasing and the INTERMEDIATE TO TERM cycle is increasing, what chance do you think the SHORT TERM cycle as if it wants to start over? Quick answer: look at your daily gold chart and look at the price bars for 12/29/05, 1/5/06 and 1/18/06. Each of them hit a new daily low and were then quickly cancelled by the more robust upward movement cycles. We now see that 01/24/06 is below 01/23/06. What are the chances that you can continue in this direction for several days? You have longer-term processes that harm you.


Now the cycles are more complex. But I hope you can get a feel for what I am trying to convey. Processes can support or oppose each other. If you can see that the monthly chart is making new highs, but the weekly chart is currently completing a new lower weekly price bar, then you have a mid-cycle of the downtrend (cycles swinging up and down the bottom). down and start over) while the long process is still running. You have opposing powers that cancel each other out at different times. And in them is the short term cycle, which when it comes to long term cycles, is just noise. However, as the more extensive processes cancel out the "noise" or short term cycle becomes more noticeable, and you will see some nice changes as the market moves more sideways on the lower time frame charts.

During strong upward or downward trends, they affect the short term cycle cycles. As you can see on the daily gold chart, the changes are in place, but These start and end quickly to continue in the strong uptrend rule.


Now that you have the same better idea about the cycle, we can see the PAUSE training in a clearer light.


While the long and medium-term cycles help those of us who analyze the charts of these cycles to determine the long term direction of prices, it is the daily short term chart and lower time frames that they are—used to "customize" our commercial contribution. The idea is to reduce the risk and make a new decision as soon as possible.

With GOLD, for example, we can see that the long-term and medium-term direction is on the rise. Hence, the force behind the higher prices is strong in, the lower daily prices. This suggests that when we use daily cycle rotation data (based on short term cycles) to determine where the daily rotations are likely to occur, we want to capture the swing lows they create, rather than trying to shorten the peaks. Swing that precedes them. As the saying goes, trade with trends! No wonder it has stood the test of time. It has stood the test of time.


PAUSE training is when you have a short term cycle that is due to healthy long term cycles, and you are trying not to end the swing (confirm). A good example is the price bar in gold from 01/09/06. Notice how this price bar has peaked, followed by a price bar that doesn't move above it. While the next price bar didn't hit a higher high, it didn't hit a lower low either. This is known as the INSIDE bar.


The short term cycle ended and tried to correct (go down) at that point. However, the longer-term processes were too strong to allow the lower period cycle to complete its swing with the complete confirmation. Confirmation requires a subsequent price bar to reach a lower low than the previous price bar (for swinging highs, lows are the opposite). So if in the case of the new 1/9 high, a price bar had formed later with a lower low than the previous price bar, the 1/9 high would have been confirmed as a swing top (of) assuming that this lower short occurs earlier at a price that ultimately exceeds 1/9).


The maximum price of 1/9 turned out to be a PAUSE training cap. As mentioned above, this is an attempt to create a swing that does not achieve confirmation.


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