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Cycle Analysis... a way of looking at price action.


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Cycle Analysis... a way of looking at price action.

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  #11 (permalink)
 glennts 
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Going to soon move these posts out of this thread into a new one but before then wanted to post this follow up on the evolving Multi-Week Cycle to not have a break in this demonstration of multi-time frame support / resistance relationships.



On the 1st price fell into the highlighted area where the support that would turn the Multi-Day Cycle and the trend of the 24 Hr Cycle was likely to be found. On the 2nd price finished off that bottoming pattern with a 24 Hr Cycle Double Bottom which is often the signature of a MD Cycle Low. Out of the Low price pushed up for 3 bars, reversed lower and found no support where it should occur on the upside of the MD Cycle. This suggests that today's overnight High, at 4 Days from the prior Multi-Day Cycle High ( avg is 5 days ) is itself the new MDH. That it is a Lower High argues that the Multi-Week rotation has likely rolled over and that the sellers will dominate price action until the next MD / MW Low. Just as the Multi-Day rotation will break 24 Hr areas of support / resistance, the Multi-Week rotation will break Multi-Day areas of support / resistance. A possible scenario would have price finding the low of the current 24 Hr rotation and then pushing higher to test the underside of the 24 Hr ma for resistance as it did on Tue/Wed. Assuming normal behavior price will be rejected lower looking for an area of higher time frame support, outlined in Green. Corrections can happen in price and/or time and with 2 or 3 days left in this current MD Cycle and the fact that support is rising up underneath price, it's quite possible this will flag into a sideways to down instead of a simple zig-zag lower. As of the time of this post price is below the 24 Hr Pivot and the developing POC .... MDCycle correction behavior, and below the 5 Day ma which has rolled over.... MWCycle correction behavior.

Out of respect for what the Spoo analysis thread has come to represent this will be the last of my comments here.

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  #12 (permalink)
 glennts 
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..... A possible scenario would have price finding the low of the current 24 Hr rotation and then pushing higher to test the underside of the 24 Hr ma for resistance as it did on Tue/Wed. Assuming normal behavior price will be rejected lower looking for an area of higher time frame support, outlined in Green. Corrections can happen in price and/or time and with 2 or 3 days left in this current MD Cycle and the fact that support is rising up underneath price, it's quite possible this will flag into a sideways to down instead of a simple zig-zag lower......




Several very telling things to notice about how price is behaving.

When you trade intraday you are at the mercy of the 24 Hr rotation... price swinging between the highs and lows of the 24 Hr Globex period. If you can find your place in that rotation then you have found the underlying bias that will influence the outcomes of your decisions. With four 6 Hr bars / 24Hr Globex Session it is relatively easy to identify which side of the rotation you are on.

On this chart the 360 Min candles are inside a white outlined rectangles that represent the 24 Hr Globex session. For the bars and the rectangles I have modified the Heiken Ashi color scheme. A close above the prior period's high is marked bright green and any subsequent close that does not make a new closing high or does not take out the prior low is marked dark green...an inside bar. Conversely, A close below the prior period's low is marked bright red and any subsequent close that does not make a new low and does not take out the prior high is marked dark red. For me, this provides a very effective way to visualize momentum.

Notice the two lower high days on the left hand side.... bright red. Notice the two lower high days of yesterday and today... dark green. The prior bright red days were trend lower days while these past two session were no-trend days, as I call them. Price had every excuse it needed to push lower but it couldn't get it done and each day closed within the prior day's range.

In the quote above the expectation was for price to push up and test resistance as it did during the earlier two red down days. Price did push up yesterday and it did find resistance that then sent it lower but notice how much higher if got above the white ma where resistance would normally be found. Compare this with the earlier attempt and notice that the bodies of those candles respected the resistance represented by the down trending white 24 Hr ma. Something is behind these up bars that cause them to extend higher than would normally be expected during a correction of this degree. ( Multi-Week )

In earlier posts the relationship between higher time frame and lower time frame areas of support and resistance was discussed. The white ma is showing us the rotation of the Multi-Day Cycle and the behavior of the Multi-Day Cycle itself is being determined by the Multi-Week rotation. One of the principles I use is that lower time frame rotations will be turned by higher time frame areas of support and resistance. If the Multi-Week Cycle is looking for the support that will turn it higher, it is going to be found in a higher time frame. Running thru the lows of today and the lows of Wednesday and Thursday is the new June Monthly Pivot at 4080.... an area of higher time frame support that can certainly turn a Multi-Day Cycle, notice the Stochastic, and may be enough to turn the Multi-Week Cycle Higher. Adding to that the observations of up moves extending high than expected, the failure of price to trend lower on a daily basis and you have a reason to believe that this flagging pattern will resolve itself higher.

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 glennts 
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A useful characteristic of the 360 min bars is that they are unequivocal. When closing higher they are pushing for the 24 Hr Globex Session High. When closing lower they are looking for the support that will put in the next Globex Session Low. With that behavior as a guide you can assume that the last bar of yesterday's session as seen on this chart was the High of the approximate 24 Hr rotation and price is now pushing lower looking for the next Low. Typically this rotation will be seen as a 4 bar +/- event. Currently we are in the 3 rd bar. If it is areas of higher time frame support / resistance that turns a lower time frame cycle, then for the 24 Hr Cycle, the next higher time frame would be the Multi-Day time period of approximately 5 days.

The white rectangle highlights a cluster of.... because price is coming down from above... what is presumably levels of support. ie: the Weekly Pivot, the simple Moving Average of the prior 5 days, the Middle of the 5 Day Donchian Channel and this session's Globex Pivot. Notice how this cluster is in the approximate center of the price rotation from the past seven days. This is typical behavior when the Multi-Week Cycle ( @ 15 Days ) builds a flag.

So, what to expect? The white arrows point out how the 24 Hr ma shows the Multi-Day rotation. On this last turn up that ma is aligning with the Blue ma that represents the trend of the higher time frame Multi-Day Cycle. Compare the slope of this section of the white ma with the earlier white ma up moves. This alignment is showing a lessening of momentum that often precedes a break of the higher time frame support. Normal behavior of the Multi-Week rotation is for price to break Multi-Day levels of support/resistance. Could yesterday's push lower and reversal higher be that break. Possibly. What is also typical behavior of a Multi-Week Cycle correction is a test of the bottom of the Multi-Day Donchian Channel here at 4071.5 which until proven otherwise, remains unfinished business.

Good luck, Be careful.

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 glennts 
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glennts View Post
With that behavior as a guide you can assume that the last bar of yesterday's session as seen on this chart was the High of the approximate 24 Hr rotation and price is now pushing lower looking for the next Low. Typically this rotation will be seen as a 4 bar +/- event. Currently we are in the 3 rd bar. If it is areas of higher time frame support / resistance that turns a lower time frame cycle, then for the 24 Hr Cycle, the next higher time frame would be the Multi-Day time period of approximately 5 days.



In this update to this morning's post, the 24 Hr Low was put in 1 tick below the Middle of the 5 Day Donchian Channel in a demonstration of higher time frame areas of support / resistance turning lower time frame cycles. That price immediately reversed is normally quite bearish but as this Multi-Week Cycle correction continues to flag, and as you can see over the past several days, there is a great deal of shoving back and forth as the Bulls / Bears wrestle for control. Price action is volatile but so far continues to rotate around the center. However, if the analysis of this morning's Low being the Globex Session Low is accurate and price is now in a new rotation lower then conceivably there is enough time available for a test lower to Bottom of the 5 Day Donchian Channel now at 4072.25.

Ask questions, get answers.

Good luck, Be careful

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 chipwitch 
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glennts View Post


In this update to this morning's post, the 24 Hr Low was put in 1 tick below the Middle of the 5 Day Donchian Channel in a demonstration of higher time frame areas of support / resistance turning lower time frame cycles. That price immediately reversed is normally quite bearish but as this Multi-Week Cycle correction continues to flag, and as you can see over the past several days, there is a great deal of shoving back and forth as the Bulls / Bears wrestle for control. Price action is volatile but so far continues to rotate around the center. However, if the analysis of this morning's Low being the Globex Session Low is accurate and price is now in a new rotation lower then conceivably there is enough time available for a test lower to Bottom of the 5 Day Donchian Channel now at 4072.25.

Ask questions, get answers.

Good luck, Be careful

I'm embarrassed to say this, but there are so many overlays on the charts I can't read them. It took me a good 5 minutes to even see the price bars. Maybe others won't have that problem, but I certainly do

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 richw 
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Right now, I am hoping for a move toward that value of 4072.25 so that I can get a great entry on what I am hoping happens, which is a move upward and through the resistance at the top of this consolidation period of the last several days. I normally trade MYM vs ES, but they have very similar movements. We have different tools for looking at similar things, and I want to eventually get to the point where I can catch a larger percentage of the multi-day swings up and down.


glennts View Post
In this update to this morning's post, the 24 Hr Low was put in 1 tick below the Middle of the 5 Day Donchian Channel in a demonstration of higher time frame areas of support / resistance turning lower time frame cycles. That price immediately reversed is normally quite bearish but as this Multi-Week Cycle correction continues to flag, and as you can see over the past several days, there is a great deal of shoving back and forth as the Bulls / Bears wrestle for control. Price action is volatile but so far continues to rotate around the center. However, if the analysis of this morning's Low being the Globex Session Low is accurate and price is now in a new rotation lower then conceivably there is enough time available for a test lower to Bottom of the 5 Day Donchian Channel now at 4072.25.

Ask questions, get answers.

Good luck, Be careful


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 glennts 
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chipwitch View Post
I'm embarrassed to say this, but there are so many overlays on the charts I can't read them. It took me a good 5 minutes to even see the price bars. Maybe others won't have that problem, but I certainly do

Maybe this will help.




As was mentioned at the start of this thread these charts were swept over from the long running Spoo analysis thread and unfortunately in the process several introductory posts were lost in the transition. At some point a more comprehensive discussion of this approach will begin in the Elite section but in the meantime, if anyone wants to get deeper into understanding these methods, this link will take you to 6 mos of detailed discussions in a 6E thread over in Currencies.


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 glennts 
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richw View Post
Right now, I am hoping for a move toward that value of 4072.25 so that I can get a great entry on what I am hoping happens, which is a move upward and through the resistance at the top of this consolidation period of the last several days.

I agree with your expectations. As I look at things price is in a Multi-Month Cycle upside rotation... price coming out of a MM Cycle Low searching for the resistance that will put in the next MM High. On this Weekly chart the area highlighted by the white rectangle is where that resistance is likely to be found. The rotations of this larger cycle have been fairly regular at 12 weeks H - H and L - L. Currently we are in the 10th week from the prior swing high leaving ample time to get higher in the average duration.... no reason at all why 13 or 14 wouldn't be acceptable.



In the world of higher time frame / lower time frame relationships, the Multi-Month Cycle determines the behavior of the Multi-Week Cycle. In prior posts the Multi-Week Cycle has been described as being in a flagging correction. This is a consequence of the Multi-Week Cycle wanting to correct lower but being unable to due to the stronger buying pressure of the larger Multi-Month Cycle pushing up.

So I think that breaking out thru the top has a very high probability and the only question is what is it going to do before that happens. In large consolidation patterns I always expect to see a Stop Cleaner, a sudden violent move that is intended to wipe out, in this case, the weak longs. My intent during a sudden drop will be to get what will then be discounted OTM naked calls above the top of the range as well as getting aggressively long in the ES.... after seeing signs of a bottom being made. A word of caution... if price tests and breaks 4080 which I suspect is likely then a quick drop lower into the low 60's - mid 40's and a reversal back up is a reasonable expectation. Although you are rooting for 4072, getting in front of price as it approaches that level will probably not end well.

Don't attempt this without adult supervision.

ps. In the chart the Green ma represents the trend of the Multi-Week Cycle which is displayed as a 4 bar ma. The correct length should be 3 bars as the MW Cycle is @ 15 Days but a 3 bar ma gets choppy. Because the MM Cycle effects the trend of the MW Cycle, this ma has to turn up to reflect that influence. If I plot it as a 3 period ma it has made its turn higher. Also, next week will see the long up bar of two weeks ago drop out of the average and this will see it accelerate higher.

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 chipwitch 
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glennts View Post
I agree with your expectations. As I look at things price is in a Multi-Month Cycle upside rotation... price coming out of a MM Cycle Low searching for the resistance that will put in the next MM High. On this Weekly chart the area highlighted by the white rectangle is where that resistance is likely to be found. The rotations of this larger cycle have been fairly regular at 12 weeks H - H and L - L. Currently we are in the 10th week from the prior swing high leaving ample time to get higher in the average duration.... no reason at all why 13 or 14 wouldn't be acceptable.



In the world of higher time frame / lower time frame relationships, the Multi-Month Cycle determines the behavior of the Multi-Week Cycle. In prior posts the Multi-Week Cycle has been described as being in a flagging correction. This is a consequence of the Multi-Week Cycle wanting to correct lower but being unable to due to the stronger buying pressure of the larger Multi-Month Cycle pushing up.

So I think that breaking out thru the top has a very high probability and the only question is what is it going to do before that happens. In large consolidation patterns I always expect to see a Stop Cleaner, a sudden violent move that is intended to wipe out, in this case, the weak longs. My intent during a sudden drop will be to get what will then be discounted OTM naked calls above the top of the range as well as getting aggressively long in the ES.... after seeing signs of a bottom being made. A word of caution... if price tests and breaks 4080 which I suspect is likely then a quick drop lower into the low 60's - mid 40's and a reversal back up is a reasonable expectation. Although you are rooting for 4072, getting in front of price as it approaches that level will probably not end well.

Don't attempt this without adult supervision.

Interestingly (to me, in any case), to date, the closest thing I have to a successful strategy is essentially what you're talking about but at a scalper level. I watch the 4 tick range chart on MES for the waves, or cycles and then look for confirmation of what I'm expecting in other areas such as cumulative delta which also moves in waves that correspond with the price chart. The DOM is my last confirmation to pinpoint the reversal of those waves. Fractal symmetry with what I think you're talking about. Plus, I often see that stop cleaner. It shows as a huge dump of orders that usually signals the end of control, ie CD spikes up big, and then nothing just before sellers begin to test the water and take control.

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 glennts 
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chipwitch View Post
Interestingly (to me, in any case), to date, the closest thing I have to a successful strategy is essentially what you're talking about.

We are all looking at the same thing but we see it and understand it in different ways depending on what we bring to the table. Whether it is the methods of Gann, Elliot, Brooks, Hurst, Elhers or anyone else, I have always wanted to understand what they noticed that inspired their expressions. Somewhere there is an overlap and in that somewhere is where I try to put myself.

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