Analysis and Trading based on Envelopes, Waves, Cycles

Follow Up

Closed Short position

Opened Short position

In the last issue of Tradersworld Alexander Stracker reinvents the wheel.

Octave Harmonics and Market Vector Line of Thrust By Alexander Straker

Simple concepts in trading can be amongst the most powerful. In terms of music, we hear two notes of the same quality (end of a cycle) at precisely a doubling or halving of mathematical frequency. This is of course a musical Octave, for example, middle C up to high C on a piano.
W.D. Gann heavily emphasizes the significance of the 50% retracement level for traders.

Gann’s 50% retracement rule.

“After an initial sustained price move either up or down, prices retrace to 50% of their initial move. If the retracement exceeds 50%, prices should continue to the 62.5% level before a reaction occurs.”

The same rule Gann applies here to price levels also applies in time segments. Having this understanding may not seem terribly revolutionary or significant, however a glance at these principles in action reveals a surprising number of useful price and time harmonic points of resonance where a market reversal becomes a high probability.

If we then combine some simple principles of vector line of thrust and parallels, many robust trading ideas emerge. First, let’s look at the 50% rule in action.

Simple concepts in trading can be amongst the most powerful. In terms of music, we hear two notes of the same quality (end of a cycle) at precisely a doubling or halving of mathematical frequency. This is of course a musical Octave, for example, middle C up to high C on a piano.
W.D. Gann heavily emphasizes the significance of the 50% retracement level for traders.

Gann’s 50% retracement rule.

“After an initial sustained price move either up or down, prices retrace to 50% of their initial move. If the retracement exceeds 50%, prices should continue to the 62.5% level before a reaction occurs.”

The same rule Gann applies here to price levels also applies in time segments. Having this understanding may not seem terribly revolutionary or significant, however a glance at these principles in action reveals a surprising number of useful price and time harmonic points of
resonance where a market reversal becomes a high probability.
If we then combine some simple principles of vector line of thrust and parallels, many robust trading ideas emerge. First, let’s look at the 50% rule in action.

Spot Coffee Daily with the 50% retracement marked to the main swing, ultra-simple yet very powerful! It’s not only the 50% retracement that is powerful, the 50% extensions are also worth noting.

Spot Coffee with 50% extensions applied, clear support and resistance in both cases. Multiple
extensions validate the continuing resonance of the musical Octave harmonic in Price at work
in the market.

Switching to a Time viewpoint. In this case, we measure a prior swing of a similar degree as
the benchmark. We are applying the tool to the swing before the main move and comparing
this to the swing after the main move

Once again it is clear that 50% as well as 100% musical Octaves are very powerful time markers
with price action reversals at both lines!

To enhance this view, we could add a simple vector thrust line to the first swing then copy &
paste this to the beginning of the second swing. Here is the result.

The main point to observe here is the angle of the thrust line and how price action essentially
travels along the same vector until it’s end point with some minor fluctuations either side.
Another way to view this is adding parallels to the vector creating a full channel that ‘contains’
the swing

This next chart combines all the elements so far together. Here is the power of applying the
50% principle in price and time plus simple vector lines of thrust

The resulting potential trade set-up required minimal discretion, follows easy to understand
and simple rules that self-validate, and produces an acceptable reward for risk ratio.

W. D. Gann’s genius at work here! Sometimes a simple concept can lead to a wonderful
opportunity. In many traders experience, the 50% (or Octave) principle is one of the standout
concepts which consistently produces results in any market and timeframe. 

For more information on my research and upon my 3-Volume Universal Golden Keys Series,
please see my author page at the Institute of Cosmological Economics here:
https://www.cosmoeconomics.com/EZ/ic...er-straker.php

Wyckof and Weinstein revamped recently
new look old concepts

BTCUSD 1 mn

Closed Long Position

after an Uptrend there is always a Downtrend (Parisboy's Rule) - opened short position

Courtesy of Chris Grafton

80 day cycle just bottomed.

Permission was just granted for Grayscale to introduce a Bitcoin ETF and price advanced quickly, directly out of the trough we were calling for in Monday's macro note.

With one difference however: we had this down as a 40 week cycle trough and the price surge has re-phased the cycles analysis placing the 40 week cycle trough back in mid-June rather than this week.

This happens from time to time but the tactical takeaway remains the same in this case: a sharp price increase out of the trough.

We are taking this step by step for now and are looking for a 40 day cycle peak around 30,000 into mid-September (blue target box).

The first thing that needs to happen however is for median price to cross up through the 40 day FLD just above current levels circa 27,800.

It is feasible that the FLD acts as near term resistance, but we are not anticipating a major pullback.

Longer term be aware that the peak of 13 July was that of an 18 month cycle, which implies that the 18 month cycle is now falling, which points to a broad market headwind.

Cable H1:

natural gas futures ng 4 h

TASI (SAUDI ARABIA) Daily

Enelopes

Courtesy of Chris Grafton

TASI Index - new 20 week cycle finds its feet.

As forecast in the last note (10 August) the 20 week cycle trough came in on time, pushed hard, dropped and has now finally found a foothold and is advancing well.

The 40 day FLD was crossed up on 21 August and the natural projection is circa 11,700.

However, with a new and rising 20 week cycle as a tailwind we could see higher prices than this around end September.

Its worth noting that the price high in July was likely an 18 month cycle peak and as such we need to see this rally as a feisty countertrend move.

This means that when TASI does top, it likely falls hard.

We will stay on top of the analysis.