OnLine Cycle Analyst's Seminar - Cycle Identification - 6

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Awareness of the 1/2 cycles makes it easier to identify and trade the 20-day trading cycle. Once you identify the low of the first 10-day cycle, you know the next 10-day cycle bottom will be the bottom of the 20-day cycle as well. Important to know because the accuracy of identifying 10-day cycles with the Bressert Double Stochastic averages better than 80% in all time frames, all markets. The accuracy of identifying the 20 bar trading cycle averages about 70%, and awareness of the 10-bar cycle can increase the accuracy of buying bottoms and selling tops of the trading cycle.

The mechanical buy and sell signals work well for identifying cycle tops and bottoms and generating trading signals, but utilizing a knowledge of the half-cycle can improve the accuracy of trading cycle bottom selection and your confidence in your trades. Using the 10-bar 1/2 cycle, accuracy of cycle identification can be increased by 10 - 15%.

THE INTERPLAY OF CYCLES WITHIN CYCLES

The key to trading with cycles is an understanding of the interplay of cycles within cycles. Almost all trading cycles have a 1/2 trading cycle as in the illustration below. A 20-day (bar) trading cycle has within it two 10-day (bar) cycles. One 10-day cycle begins as the 20-day cycle begins and typically bottoms halfway into the 20-day cycle. As the first 10-day cycle ends, the second 10-day cycle begins and it ends as the 20-day cycle bottoms. Therefore, a 20-day trading cycle always begins and ends with a 10-day cycle.