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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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  #41 (permalink)
 glennts 
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Today is the 16th day of this Multi-Week Cycle which has a average duration of 15 Days. On that bases price is closer in time to the end of this immediate decline than the beginning and it is reasonable to see a push higher at some point to test for resistance.



The Multi-Week Cycle is typically constructed out three Multi-Day Cycles with average durations of 15 and 5 days. Yesterday was the 5th Day of the 3rd Multi-Day Cycle in this now 17 Day Multi-Week Cycle. The 15 Day Stochastic is attempting a turn as price is finding support on the Blue Pivot of the 24Hr Globex Session. Notice the Low of this session's candle is sitting on the POC of yesterday's session. This behavior is a change from the past 4 days and is the "look" of a Multi-Day Cycle Low. As this would be the 3rd MDL of the MW Cycle it is reasonable to assume, until proven wrong should price take out yesterday's low, that this is also a Multi-Week Low.

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  #42 (permalink)
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This 360 Min chart allows us to get inside the Multi-Day Cycle. The White arrows mark the Highs/Lows of the @ 4 bar 24Hr Globex Cycle rotation. Notice the 2nd arrow from the left marking the Lows. Why is this a Low? This is marked because it was clearly an attempt to "hold the line" in the face of overwhelming selling in a futile attempt to push higher. The arrow after that is marked for similar reasons which can be understood if you compare the height of the wick compared with the surrounding bars.

The effort to put in a Multi-Day Low is more evident if you notice the loss of momentum in yesterday's decline, the behavior of the bars from today's session as they sit atop the 24 Hr Pivot and with their lows standing on the High Volume Node ( POC ) from yesterday. The key behavior to watch for is if this 24 Hr Cycle can take out the overnight high ( arrow with ? ) and right translate. Behavior consistent with the upside of the Multi-Day Cycle.

More significant is seen on the Multi-Day Volume Profile on the right indicating the highest volume of the past 5 days is accumulating at this level.

The Multi-Day Stochastic has been trying to push higher since yesterday.

>>Can reports about the economy override this expectation? Of course they can... <<


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 glennts 
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This is an update to the prior chart.

>> "The key behavior to watch for is if this 24 Hr Cycle can take out the overnight high ( arrow with ? ) and right translate. Behavior consistent with the upside of the Multi-Day Cycle."



So, price did take out the overnight High and put in what is a good candidate for this 24 Hr Globex rotation and unless the FOMC announcement is surprisingly Bullish, will likely stand.

Several things of note.

When price comes out of a MDL the next event is the "where and when" of the next MDH. The average of these swings is twenty 360 Min bars ( 5 days ). It can be shorter, it can be longer but over time the average tends to always return to 20 bars. This last MD swing Low was 15 bars. The candidate for the 24 HrH is at 17 bars. Could this be the next MDH in the making? In a very strong downtrend as price has given us on the backside of this Multi-Week Cycle, because the MW determines the behavior of the MD ( Dominant / Minor Cycle relationship ) the MD will tend to peak early.... short up, long down.... while the MW is pushing lower. Notice that the white ma is @ mid-way between yesterday's low and today's (so far) high. This is often the "look" of a lower MDH in an ongoing downtrend.

In the prior post the possibility yesterday's MD Low was also a MW Low was commented upon. Just as price rising up out of a MDL will right translate a 24 Hr Cycle, price rising up out of a MW Cycle Low will right translate a MD Cycle. ( This is the puzzle part. ) Even if the last bar is the 24 Hr H, if the next MDH is off to the right and perhaps up at 3870, then price will put in a higher 24 HrL and take out today's high as the MD upside get underneath price and pushes up. If however yesterday's Low is not the MWL then this MD Cycle could peak early and when this current 24 Hr Cycle comes down looking for support, there may not be any.

So, the behavior of this 24Hr Cycle ie: how far it corrects lower, or if it flags out to the side because the Multi-Day upside buyers are right there, will reveal a lot about the status of the Multi-Day and the Multi-Week Cycles.

And there is the FOMC report at 2 PM EST just to make it more interesting.

EDIT: The chart has been replaced with an updated version showing price testing and breaking the support of the 4 Hr ma. This is the backside of the 24 Hr Cycle and as I type this, price has found support on yesterday's POC and just reversed back higher and is now at the level of the Blue highlight of the MD MP on the right. Volatility in response to the FOMC and a suggestion, if it just made the next 24 Hr rotation Low in 4 bars, that the MD upside is still doing its thing. Pure speculation at this point... but why not.

Try this:

The white ma represents the trend of the 24 Hr Cycle. On the backside of the Multi-Day Cycle this ma represents the area where price will find resistance as is clearly demonstrated by the 5 bars that tested its underside. Notice an important but subtle characteristic of this behavior. Although several of those bars wicked above the line, none of the bodies manages to clear it. Notice the green up candle.... body low sitting on the ma. You can create this useful double smoothed ma by making a 4 period SMA of a 4 period SMA. In Ninja you set the SMA input to indicator and source it to the SMA. Try this with a 60 min SMA of a 60 Min SMA and see if price respects what you now have on your chart.

Good lucK, Be careful.

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 glennts 
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Update to the prior post.

>>" Even if the last bar is the 24 Hr H, if the next MDH is off to the right and perhaps up at 3870, then price will put in a higher 24 HrL and take out today's high as the MD upside gets underneath price and pushes up. If however yesterday's Low is not the MWL then this MD Cycle could peak early and when this current 24 Hr Cycle comes down looking for support, there may not be any."<<



A great example of the power of Cycle Analysis.

Notice the Head and Shoulders bottom pattern formed of adjacent 24 Hr Cycle Lows. An expression of the concept that the structure of Higher Time Frame Cycles is constructed out of the Lower Time Frame Cycles.

A higher 24 Hr L confirms the turn up out of a Multi-Day low. A higher MDL is needed to confirm the turn up out of a Multi-Week Low. The Multi-Week Cycle rotation higher will break areas of Multi-Day resistance highlighted by the white rectangle. It is in that area where the 1st MDH is likely to be found and just as how this 1st 24 Hr Cycle behaved as it looked for its Low informed us about the MD Cycle, how the MD Cycle behaves as it corrects and seeks the next MDL will inform us as to the status of the Multi-Week Cycle. It will be out of that (assumed) Higher Multi-Day Low that an attempt to break thru overhead resistance will launch. .

Fractal behavior.

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The Multi-Week Cycle is typically constructed out three Multi-Day Cycles with average durations of 15 and 5 days. Yesterday was the 5th Day of the 3rd Multi-Day Cycle in this now 17 Day Multi-Week Cycle. The 15 Day Stochastic is attempting a turn as price is finding support on the Blue Pivot of the 24Hr Globex Session. Notice the Low of this session's candle is sitting on the POC of yesterday's session. This behavior is a change from the past 4 days and is the "look" of a Multi-Day Cycle Low. As this would be the 3rd MDL of the MW Cycle it is reasonable to assume, until proven wrong should price take out yesterday's low, that this is also a Multi-Week Low.



So now what?

Price pushed up out of a Multi-Day Cycle Low and that Low also became a candidate for a Multi-Week Low.

When a Dominant Cycle turns it will break Minor Cycle areas of Support / Resistance.

As the MD turned higher it broke above the resistance of the white 24 Hr ma and when tested, found support.

When a MW Cycle turns higher it will break areas of Multi-Day resistance. It failed to do that and was rejected back down arguing that the MW Cycle's initial attempt to put in a Low failed.



In an earlier post ( # 21 ) the "is it above, is it below" method of simply determining a trading bias was discussed. In the below 15 Min chart, the 60 Min ma is below the 360 Min ma. Price is on the backside of the 24 Hr rotation. The bias is lower. Inside the 24 Hr Cycle is the @ 6 Hr Cycle. On this chart, at 4:30 that Session Cycle found its Low and is now looking for the resistance that will put in the next high of this Minor Cycle. The white rectangle highlights the area where this resistance would be typically be found. Price put in a higher swing low at @ 6:00 and so far has been unable to push up against the selling to make a new swing high. In this context, this is quite bearish. In my own trading I will give it the opportunity to push up and test overhead resistance but should the uptrend line currently under price breaks, I'll bite.



Good luck, Be careful.

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 glennts 
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From the earlier post above: " The white rectangle highlights the area where this resistance would be typically be found. Price put in a higher swing low at @ 6:00 and so far has been unable to push up against the selling to make a new swing high. In this context, this is quite bearish. In my own trading I will give it the opportunity to push up and test overhead resistance.... "



In this chart the Dominant Cycle / Minor Cycle relationship is the 24 Hr to the component 6 Hr Cycle which I think of as the Session Cycle for obvious reasons. The dynamic referred to in the chat comment box exists between ALL Dominant/Minor Cycle pairs. The Multi-Day to the 24 Hr. The Multi-Week to the Multi-Day. The Multi-Month to the Multi-Week. The Multi-Year to the Multi-Month. Look at the earlier charts in this thread or follow the link to similar posts over in Currencies and you will see multiple examples of this phenomenon.

People often make reference to price action being fractal but how often are you shown a way to use that behavior to your advantage? Figure out how to make this work for you down here inside each trading session and you will then be able to make it work across all time frames.

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 glennts 
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When a MW Cycle turns higher it will break areas of Multi-Day resistance. It failed to do that and was rejected back down arguing that the MW Cycle's initial attempt to put in a Low failed.


In Cycle Analysis when an attempt at a turn fails as above and the expected duration extends past the average it is because, in this case, of the selling strength of the Dominant Cycle overpowering the initial attempt. Price skidded lower on Thursday after being rejected by Multi-Day resistance. Friday put in a Double Bottom with Thursday and trading from this Monday's session put in a higher 24 Hr Low and closed above the 24 Hr Pivot, characteristics of price moving up out of a MDL. The analysis here remains the same as was posted several days ago. If this turn is also a turn out of a Multi-Week Low then price will break Multi-Day resistance and push higher looking for the next MWH. On this chart MD resistance is represented by the dotted 5 Day SMA and the currently Red Weekly Pivot. The solid blue line higher at 3772 is a double smoothed version of the 5 Day SMA. If price can break above this area of Minor Cycle resistance (notice the 5 Day SMA bending) then the 3850 - 3950 area represents where the resistance that will put in the next Dominant Cycle High is likely to be found.





On June 12th a chart referencing the @3720 area as possible Multi-Year support was posted #39 & #40.

The Monthly chart below shows that level is still being respected but with 9 trading days before the Monthly candle closes there is still much that can happen.



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 glennts 
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An interesting chart.



When price confirms your expectation of how it might behave then it is reasonable to assume you have at least figured out the Dominant / Minor Cycle relationship on this time frame. The blue circle highlights the area of initial Multi-Day resistance mentioned in the prior post. The white ma represents the trend of the 24 Hr Cycle and because how this cycle behaves is determined by the rise and fall of the Multi-Day Cycle, The 24Hr reveals the MD Cycle. In the real world we do not see the wind, we see and feel the effect the wind has. Same is true here. Not suggesting there is some actual link between nature and price action but it is a useful analogy.

Notice the slope of the two black short term uptrend lines. This recent one is much steeper showing greater momentum.

The dashed blue line is the Middle of the 5 Day Donchian Channel. It was the high of two bars ago and currently where the highest volume is building. A demonstration of the significance of this technical. When price breaks thru the Middle of a Donchian Channel which reflects the length of the Minor Cycle, it will typically head to and test the edge of the other side.... blue arrow, top right. In the upside phase of the MW rotation, price will break this upper edge.




Inside the MD rotation is the 24 Hr Cycle. Inside the 24 Hr Rotation is the @ 6 Hr Session Cycle. On this 15 Min chart the color Sienna marks indicators representing where on the upside of the 24 Hr rotation, the @6 Hr Session Cycle is likely to find support. The rectangles block out a 60 Min 1/2 hr - 1/2 hr time period and bar counts have been added to illustrate the SC rotation. When price brakes the levels represented by the Sienna indicators, it will be because the higher time frame cycle that Dominates the behavior of the SC, the 24 Hr Cycle, has rolled over and is pushing lower. Notice the Dark Magenta 60 Min ma does a good job of revealing the SC. The SC is made visible by observing the effect it has on the trend of the Minor 60 Min Cycle. Boxes inside boxes. The fractal nature of cycles.

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 glennts 
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The red down bar at the start of Wednesday's Globex Session has price on the backside of the 24 Hr Cycle rotation as it pushes lower looking for the next 24 Hr Cycle Low. On the upside of the Multi-Day Cycle support will generally be found on the white 24 Hr ma, the Middle of the 24 Hr Donchian Channel ( not shown but currently at 3747.25 ) or the 24 hr Pivot which at the time of this chart is being tested. When the MD Cycle has found it's High and rolls over this area of 24 Hr support will break. Notice how the white 24 Hr ma has aligned with the uptrend channel.... one breaks, both break. If support breaks then price will test lower looking for the next MD Cycle Low. A blue uptrend channel has been drawn to reflect this. Where the bottom of the channel crosses the Weekly Pivot and the MD ma is a reasonable area for MDL support to be found. The MP volume bulge at @ 3770 in the wick area of the last two candles of Tuesday's session suggests distribution and argues a MDH. Price currently has an excuse to test lower, if it does not break 24 Hr support and instead pushes up to a new swing high and a further right translation this MD Cycle, that will be a comment on the strength of this up move. There is going to be a MD correction at some point and that will likely result in a higher MDL. The when and the where of that next MDL will reveal a lot about the MW Cycle.

So? A higher MDL confirms the turn higher out of the Multi-Week Cycle Low. Using the observation that the rotations of Higher Time Frame Cycles will break Lower Time Frame areas of Support / Resistance, following a Higher MDL price will punch thru this immediate overhead resistance and then break above the Top of the MD Donchian Channel.

I'll be traveling for several days and unable to post until this weekend.

Good luck, Be careful.

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 glennts 
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glennts View Post


... There is going to be a MD correction at some point and that will likely result in a higher MDL. The when and the where of that next MDL will reveal a lot about the MW Cycle.

...A higher MDL confirms the turn higher out of the Multi-Week Cycle Low. Using the observation that the rotations of Higher Time Frame Cycles will break Lower Time Frame areas of Support / Resistance, following a Higher MDL price will punch thru this immediate overhead resistance and then break above the Top of the MD Donchian Channel.


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