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2) Longer-term Cycles Set the TREND for Shorter-term Cycles
This means that the cycle in the weekly time frame sets the trading trend for the daily time frame. It would be very easy to trade if we could simply say the weekly cycle is moving up; therefore, the trend is up. Or, the weekly cycle is simply moving down; therefore the trend is down… but it is not quite that simple.


The Weekly DoubleStoc Oscillator Shows the
Trading Trend For The Daily Chart

This stacked chart shows two time frames. The top weekly chart has a DBS10 oscillator that shows the trend direction for the daily chart below it.

From the high in March in the weekly chart, the oscillator is moving down.

During the month of March on the daily chart the DBS10 oscillator drops to a low level, and then turns up. Trading the upturn in the daily oscillator would have resulted in a loss because the trend was down based upon the longer-term weekly chart; and the daily Buy Signal would be trading against the trend.

But, when the DBS10 oscillator in the daily chart moves up to make an oscillator high at A in early April, the weekly oscillator is still moving down showing the trend is down, and the Sell Signal generated by the downturn at A would have been followed by a profitable drop into mid-April as the daily trading cycle bottomed at B.

On the daily chart, B looked like a potential buy based strictly on the oscillator in the daily chart in the bottom Window, but the weekly oscillator was still moving down, indicating the trend was down. Rather than buy against the trend, waiting for the DBS10 oscillator to move up and turn back down again would have generated a trade in the direction of trend into another trading cycle bottom.

Awareness of the longer-term cycles opens the door to using the oscillator in the longer-term time frame to show trend in the smaller times frames.

Next: Bull Markets And Bear Markets Have Different Characteristics