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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.

  #51 (permalink)
 
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 glennts 
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glennts View Post
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.

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.






When you look at price movement thru the lens of Cycle Analysis you then have a means of developing reasonable expectations about future price movement. Borrowing from the principles of Sine Wave Analysis used in the study of electromagnetic energy makes this possible. But let me be clear. There is no actual link between the science of physics and price movement. Price movement has no real world physical properties but what it does have is behavioral characteristics for which principles used to study electromagnetic phenomena will often provide useful analogies. In this context an analogy meaning more like than not like.

For example, these terms of physical properties are useful analogies to describe price movement: Momentum, Frequency, Amplitude, Velocity, Pressure, Strength.

Because Sine Wave Analysis is all about math, there are clearly defined concepts and measurements used to model and predict electromagnetic processes. But although this appropriation of principles is justified by recognizing the "more like than not like" association, it has to also be recognized that just as in general it is remarkably "like" and impressive predictive analysis is made possible, there are also occasions when it is "not like" and the strict application of the analogy is less impressive. This (close/not so close) association can exist in different degrees across time frames when modelling on a lower time frame becomes quite fuzzy while on a higher time frame it is quite accurate. Easy to understand if you consider that volatility is greater in the noise of lower time frames and that price movement is often less structured.

If you have been following the commentary of the past few weeks you can see examples of this. Price ultimately behaves in a way which the borrowed principles predict but it does not necessarily always do it in a way that fits precisely within the lines drawn by the exacting calculations of electromagnetic modelling.

Hopefully this attempt to give context to this approach and the charts / comments posted will be helpful.

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  #52 (permalink)
 
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 glennts 
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glennts View Post
When you look at price movement thru the lens of Cycle Analysis you then have a means of developing reasonable expectations about future price movement. Borrowing from the principles of Sine Wave Analysis used in the study of electromagnetic energy makes this possible. But let me be clear. There is no actual link between the science of physics and price movement. Price movement has no real world physical properties but what it does have is behavioral characteristics for which principles used to study electromagnetic phenomena will often provide useful analogies. In this context an analogy meaning more like than not like.




Using this 1 Min 6E chart to illustrate the above quote as the 6E, absent the HFT bot activity of the indexes, is often better behaved.

Why a 1 hr Cycle? Look at the time stamps of the swing lows. The last two are interesting in that out of the 07:06 Low price immediately put in an Hrly Cycle High creating an extremely Left Translated Hrly Cycle and resulting in a 2 Hr rotation.

Inserted in the chart is a oscilloscope image labeled to represent a 60 frequency cycle. In the precision of Sine Wave Analysis the white Zero line is the amplitude half-way point between the cycle highs / lows.

Because the 6E is being well behaved, the Stochastics at the bottom are able to give a Sine Wave like representation of the 60 Min Cycle price rotations. The white line at 50 is similar to the Zero line in the oscilloscope in that it is half-way between the highs/lows of the 60 min price rotation.

This is where it gets interesting. Ideally, if 50 on the stochastic is the mid-point of the swing, then when the K val of the stochastic crosses 50, price will theoretically be at the mid-point of its swing. White crosses have been added to show where price was when this occurred.

Is it perfect? Nothing ever is when it comes to price movement analysis.

Is it "more like" than "not like"?

The answer to this question is where you find the usefulness of Cycle Analysis.

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  #53 (permalink)
 
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 glennts 
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Price has hit the upside expectation and you can see how similar the structure of the push higher out of the recent Multi-Week Low is to the prior swing. Interestingly, compare the final two bars of the earlier move with these last two.... Friday-Monday. Does this mean the end of the move is here. Not all, but it does suggest the probabilities are shifting in that direction.



In this 360 Min chart, price is on the backside of the 24 Hr Rotation ie: The High of the current bar is the POC of the prior bar. There is a lower High. And more conclusively, price is below the 360 Min bar's Pivot. These factors argue that the HOD is in place. The Multi-Day stochastic appears to be rolling over arguing a turn of the Multi-Day Cycle.

Two principles that have served me well are:

1. Higher Time Frame areas of S/R will turn Lower Time Frame Cycles. This area of MW resistance seen on the 1440 min chart, will turn the Lower Time Frame MD cycle.

2. Higher Time Frame Cycles will break Lower Time Frame areas of S/R. If the MD Cycle is rolling over, on its way to finding the next MDL in the area of MD support, it will break 24 Hr support seen on this chart initially as the white ma at 3894 +/-. MD support is currently in the area of the Weekly Pivot at 3832.50, the Middle of the MD Donchian Channel currently 3820.75.

Good luck, Be careful.

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glennts View Post

If the MD Cycle is rolling over, on its way to finding the next MDL in the area of MD support, it will break 24 Hr support seen on this chart initially as the white ma at 3894 +/-.



Simple logic works in both directions. If the area of 24 Hr Support does not break then there is no evidence the Multi-Day Cycle has rolled over. However, when price gets a first hit against a valid area of S/R it will invariably get rejected only to try again. This current 360 Min bar will close at 11:30 so there is plenty of time to build pressure to the downside by feeding supply to the buyers. Could this area hold and put in a 24Hr Cycle Low? If the MD Cycle has not rolled over and the High of the MD Cycle is up off to the right then logic dictates that 24 Hr Support, which defines the Upside of the MD Cycle and is the backbone of the Multi-Day Cycle, will not break.

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>>>Could this area hold and put in a 24Hr Cycle Low? If the MD Cycle has not rolled over and the High of the MD Cycle is up off to the right then logic dictates that 24 Hr Support, which defines the Upside of the MD Cycle and is the backbone of the Multi-Day Cycle, will not break. <<<



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  #56 (permalink)
 
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  #57 (permalink)
 
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Price testing the 6 Hr Pivot on a 15 Sec chart.

Moving averages showing the trends of the 90 sec, ( white ), 5 Min ( Black ) and 15 Min ( yellow) Cycles. The Yellow 15 Min Cycle Trend ma is rolling over and developing as resistance arguing that the High of the 60 Min Cycle is in place and that price has been successfully rejected by resistance in this initial attempt to put in a 24 Hr Cycle Low and will now test lower looking for support.


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  #58 (permalink)
 
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glennts View Post

..... price has been successfully rejected by resistance in this initial attempt to put in a 24 Hr Cycle Low and will now test lower looking for support.




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  #59 (permalink)
 
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Earlier in this thread the practical usefulness of the 360 Min Time Frame was discussed. With only 4 bars inside the 24 Hr Cycle how this bar behaves gives a broad brush commentary on the status of the 24 Hr Cycle. That the bar makes higher highs / lows or lower highs/lows is reliably showing where price is in the 24 Hr rotation. In this chart you can see the current bar is giving a higher low after a second test of 24 Hr Cycle Support. Notice these two candles walking up the white 24 Hr ma. This behavior is consistent with price pushing up out of a 24 Hr Low. The caveat with basing decisions on the 360 Min bar is that until the bars closes 5 hrs from now, it's story isn't finished.

Notice the volume bulge on the Market Profile to the right. It's above price and suggests distribution. The two arrows highlight how the prior bar's POC marked the High or the Low of the following bar. If price were to reverse lower in it's remaining 5 Hrs to a new bar low, it would break thru 24 Hr Support and the prior bar's High Volume node which marked where the buyers stood to push the current bar higher. And to make it more interesting, price as of this chart, is finding resistance at the underside of it's Bar Pivot just as price behaved in the earlier bar before the decline.

Finally, the MD stochastic continues to roll over. Ambiguity is resolved by looking at the next Higher Time Frame. What the Multi-Day Cycle is doing determines how the 24 Hr Cycle will behave. Dominant Cycle / Minor Cycle Relationship. The confirmation that the MD Cycle has rolled over will be price putting a Lower 24Hr Cycle High.




This 60 Min chart shows price being rejected by the current 360 Min Pivot and price also now being below 24 Hr Support represented by the white dotted 24 Hr ma and the white dashed Middle of the 24 Hr Donchian Channel. This is the signature behavior of the MD Cycle rolling over. Notice the POC on the MP to the right. Distribution.

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This chart compares the behavior of the 360 Min candles of today's session with those of the prior MW Cycle High.




A MW Cycle High will also be a MD Cycle High. MD Cycle High will also be a 24 Hr Cycle High. A 24 hr Cycle High will also be the High of a 6 Hr Session Cycle rotation. A Session Cycle High is going to be structured around 2 or 3 Hrly Cycle Highs.

If you guesstimate the time and place that the Multi-Week Cycle is likely to turn, and if you are able to recognize how the relationships between the hierarchy of Higher Time Frame and Lower time Frame Cycles plays out, then it is possible to get within a few hours of catching the Swing High and Swing Low of significant price rotations... not to mention the minor rotations that occur in between.

Today's comments have focused on the possibility of a MD Cycle High being put in place by observing the behavior of the 24 Hr Cycle as it encountered various support and resistance levels and the possibility this potential MD High might also be a MW High.

In these two charts you can see that the white ma representing 24 Hr support are identical as they start to bend under the influence of the MD Cycle turn. On the left that support clearly broke the following day and became resistance as price pushed lower looking for the next MD L. After finding that support price pushed up and put in a Lower MD High and in doing so confirmed the rolling over of the MW Cycle. And you know what happened next.

Today and in prior posts enough descriptive commentary has been given that you should be able to track the unfolding events and fit them into the Dominant / Minor Cycle narrative that has been sketched out.

I'll not post for several days giving those who's interest extends beyond the curious an opportunity to post their own charts and analysis. This will give me an opportunity to see if any of this is sinking in.

If there is no effort made to respond then I will not make the effort to continue and this thread will end.

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Last Updated on August 31, 2022


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