Sunday, November 16, 2008

Cycle Analysis

re: CYCLE ANALYSIS: numeric cycle high/low is not precise, but it is only a guide. Furthermore, trading based on cycle analysis can be very costly in volatile markets as we have seen in Sept/Oct.

Also, several cycle periods emerge at the same time, so can't rely on one cycle high/low to trade as a cycle low price can be lower than a price low of another cycle.

Smaller cycle high/low is often less effective than larger cycle high/low. You will see this by reviewing your previous posts that the cycle high/low projections didn't work out. This is true whether it is standard numeric cycle high/low projections or it is fib cycle projections.

Cycle analysis is only a guide, not a trading signal as you will see cycle-price results by analyzing simulated trade result based long term cycle-price high/low analysis. Longer the price data will give us better understanding on how reliable the analysis is - at least 4+ years for day/weekly cycle analysis as example - depending on cycle analysis period.

Having said that, Markets are showing positive divergences and falling wedge formations, so upside breakout will provide momentum.

The current low is a 9mo cycle low.

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