Overview Index Pages 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 {19} 20 21 22 23 24 Offer
3) Bull Markets And Bear Markets Have Different Characteristics
The most important aspect of trading is trend, and cycles in rising markets
act differently than in declining markets. Timing Bands are divided into
BULL, or UP Timing Bands for rising markets, and BEAR, or DN Timing Bands
for downtrending markets.
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Right
Translation
A weekly cycle moving up shows as a bull rising market on a daily chart,
with the trading trend up. Therefore, the daily trading cycle will have
Right Translation, meaning it leans to the right as the market is moving
up (long upmove followed by a short downmove as shown in this chart).
In bull markets showing Right Translation, the top of the 20-day cycle
is most often the top of the second 10-day cycle.
Right Translation
shows in the time periods for bottoms and tops of the trading cycle. On
average the move from bottom-to-top will be three weeks, and the move
from top-to-bottom, one week. Knowing this makes it easier to hold a long
position through the decline into the bottom of the first 10-day cycle,
or even making an add on to the long position, expecting to take profits
as the second 10-day cycle tops, often with a Mechanical Sell Signal.Time
forecasts for cycle tops and bottoms can be narrowed using the Timing
Bands.
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Left
Translation
When the weekly cycle is moving down, the daily cycle has Left Translation,
meaning it leans to the left (short upmove followed by an extended decline
as shown in the chart.) In a bear market with Left Translation the top
of the 20-day cycle is most often made as the first 10-day cycle tops.
Left Translation
shows in the time periods for bottoms and tops of the trading cycle. On
average the move from bottom-to-top will be one week, and the move from
top-to-bottom, three weeks. Knowing this can give you the confidence to
hold a short position through the rise into the high of the second 10-day
cycle, or add on to the short position expecting to take profits as the
20-day and 10-day cycles bottom with a Mechanical Buy Signal.
Expecting
Left Translation in a declining market, you can look to sell the second
10-day cycle top in a failure pattern if it fails to exceed the previous
10-day cycle top, as the market often drops sharply into the 20 and 10-day
cycle bottom. |
Be
Prepared For The Unexpected
At times the 10-day cycle will show up very distinctly. At other times
it may seem to disappear, or it can be a combination of a short cycle
and a long cycle. For example, the first ½ trading cycle may contract
to seven days and the second may stretch to 13 days. Or the first ½
trading cycle may stretch while the second contracts. The 20-day cycle
also contracts and expands, and as the dominant cycle its activity will
affect the lengths of the two one-half trading cycles.
If
the 20-day cycle contracts to 15 days, the 10-day cycle may seem to disappear,
or there may be two smaller cycles close to the same length such as seven
and eight days. There can also be an extreme of a short and a long, such
as a four and 11. If it stretches to 28 days, the ½ trading cycles
are likely to be longer as well.
With
cycles stretching, contacting and disappearing they can be hard to identify
at times, and the lows and highs of the ProfitTrade oscillators often
coincide with the 10-day (bar) cycles and also the 20-day (bar) cycles.
Knowing
these characteristics, we can look for failure patterns that combine with
the ProfitTrader Buy and Sell Signals to generate high-probability trades
at cycle tops and bottoms. Also, using the timing of cycles, you will
know approximately when to expect the daily cycles to top and bottom. |
