I saw an article this morning doing a google search for some Pound images(article link) I'm not going to pretend to know anything about Brit politics or economics, but it's always interesting to see media explanations of market movements.A technique I think I've mentioned on this blog is taking price and using the number to find time cycles. The technique is pretty simple and self explanatory. Just take a price number and extract cycles from it. For example if price is 102.99 you could drop the cents and just go with the whole number 102. 102 Days, hours, minutes, bars, whatever. You can also half that to get 51. Our square root it to get 10.1. If 10.1 is too small, double it, triple it, or whatever. Then maybe apply these concepts by dropping the big digits and only going with numbers left of the decimal which could be 99. Or take the last 3 digits. So for something like 1229.63 use 963.
For this example I'm going to use the last 3 digits of the high on 8/9/2009 which is 1.7039 which yields 39. Counting out a static 39 bar cycle picked up a series of lows including the most recent crash low. Ok, so it's off by a bar on the last one, but who's to say the next bar doesn't end up lower and prove the cycle correct? It could play out that price drops further over the next few bars rendering the cycle hit invalid. However, knowing that price is dropping straight into a cycle point is a good heads up to look for a possible low. In a strong down trend, the low will probably be temporary which is a good spot to pull off partial profits before looking to get back in when the trend resumes. If the cycle were picking highs in a down trend then that's when to time an entry be it an initial or add-on.
The blue square highlights a low that was off by a bar. The 2nd cycle line wasn't useful anyway because price wasn't rising or falling into it. So 4 out of 6 cycle marks have been market lows with one of them off by a bar and the most recent off bar so far.
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If a cycle is showing good hits, then another thing I'll do is half the cycle. In this case, 39 doesn't half very well so I just took a 39 bar cycle and moved it to the half way area. Sure enough... hits.
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I definitely wouldn't recommend trading this method alone. It's just a nice addition to whatever system you're using.
