Cyclical Trading

Every movement in the market is a result of a natural law and a cause which exist long before the effect takes place and can be determined years in advance. The future is just a repetition of the past, as the bible clearly states:

“ The things that hath been, it is which shall be; and that which is done, is that which shall be done, and there is no new thing under the sun.”

Cycles repeat, there are long cycles and there are short cycles, and there are cycles within cycles, or "wheels within wheels".

One legendary trader who was very successful in trading cycles was WD Gann. Other methods of determining cycles are Fibonacci.
A popular way of measuring time is by timing the heavenly bodies.
We measure a day by timing the rotation of the earth around its axle, we measure a month by timing the moon in orbit around the earth and we measure a year by timing the earth’s rotation around the sun. Other methods of measure are timing the planets in orbit around the sun or as viewed from the earth.

We can also determine cycles by resistance points in price and date by using popular tools such as Gann square of 9 or we can use common market wisdom like: “Buy in May and Stay”.

All methods of cyclical trading are allowed on this thread, on all currency pairs and also Dow, SP500, etc. Please be detailed in your method of cyclical trading so we can all collaborate and learn about the next great move!

Good luck.

PS: In order to participate in this thread one needs at least one voucher. If you are serious about cyclical trading and want to participate but have no voucher, you can PM me.

Hey, Mywavez. Ah, voila, you've got the new thread opened, finally.

I shall look forward to your EW+Gann posts!

The idea is that you participate!

What cycles have been identified:

It would go a little far to try and describe the various cycles, but a very famous one is the Kondratieff economical cycle.
This is a fifty to sixty (average 54) year cycle discovered by Nikolai Kondratieff, a Russian economist in the 1920's. As a reward for his great discovery he got to spend the rest of his life in lovely Siberia.
http://www.serendipity.li/jsmill/kondratieff_cycle.png

Then there is the 37 year stock market "Williams" cycle.
This cycle consists out of 3 phases:
Phase 1: 4 bull market waves in a long 14 year uptrend
Phase 2: The shortest phase which hits its high 5 years from the start and makes a low 7 years from the start, the pattern calls for a 5 year bull move and then a 2 year bear move.
Phase 3: The final phase which makes a high 3 years from its start and then a 4 year bear market begins.

Gann discovered a number of cycles and the most important ones are:

The 60 years cycle or the Great Cycle. The most important cycle and it repeats after the 20 years cycle. This cycle was active in 1929-1934.

The 50 year cycle. Every 49-50 years this cycle repeats after a number of bull years comes a strong bearish cycle which lasts 5-7 years,
Gann found great significance in the number 7 and 7 times 7 equals 49.

The 30 year cycle is very important because it is 1/2 of the 60 year cycle. It contains 3 10-year cycles. In comparison with the annual forecast of a stock you should always make a comparison with the date of 30 years back.
So for 2010 we should look at 1980. For 2011 we should look at 1981 etc.

Then there are a number of smaller cycles. These cycles are carried by the larger cycles. Every low does not have to be a major or all time low and same way the high is not always an all time or major high. These cycles are:
20-years cycle, 15-years, 10-years, 7 years, 5-years.
The 7-years cycle is 84 months. You should watch 7 years from any important top or bottom. 42 months or half of this cycle is also important and you can break this cycle down further to 21 months or 10-11 months which is 1/8 of the 7 year cycle.
Minor cycles are 3 and 6 years and the smallest cycle is 1 year.

Another way of keeping track of cycles is the popular Delta by Welles Wilder in which he counts highs and lows on 4 time frames:
- Rotation of the earth around the axle (1 day)
- Rotaion of moon around the earth (1 month)
- Rotation of earth around the Sun ( 1 year)

There are rules about highs and lows and the number thereof in a certain timeframe and the cycles are divided into: short term, intermediate term, and long term. Each cycle has its own set of rules. You can find information at: http://www.wilder-concepts.com/index.aspx

The method is precise but requires some time to master.

Then there are astrological cycles. Important here is to know that the cycles of planets are a way to measure time. We therefore say that cycles coincide with certain planetary cycles, the planets don't cause the cycles.

Many market cycles have been found that coincide with planetary cycles. In planetary cycle trading you need to keep 2 things in mind.
1. The planet cycle as observed from the earth, which is called geocentric.
2. The planet cycle as observed from the sun, which is called heliocentric.
In order to make it easy we call all heavenly bodies planets even the moon and the sun. Of course they are not really planets but we just call them that way.

Gann also used astrology in his trading. How much we really don't know. Some say it was his main source, others say it was a part of his trading but not his main source. I believe that Gann used all kinds of technical analysis including chart patterns, numerology (square of 9 etc.), astro cycles, trend lines, and even wave counts, his methods were way to complex just to credit one particular method of trading.

Anyway I found this book on google books if you are interested in astro cycles: Financial Astrology

If you are trading with MT4 there is great software available at:
http://marketnaturalcycle.com/

In this thread we will use all these cycles to try to determine the direction of the market.

Following is a chart which shows a pattern on the EURUSD that I discovered where the cycle is about 182 days, or 1/2 year.
Currently this 1/2 year cycle seems to coincide with highs and lows, but prior to 2008 when eurusd was in a strong bull trend the cycle coincided with lows and highs within the larger cycle.

Another was of measuring resistance points in time is by using the square of 9.
Important angles on the square of 9 are: 45, 60, 90, 135, 150 and 180 degrees and then multiples of those angles.
Since the square of 9 starts at 1 and numbers go in a spiral around the 1, the days for that method are: 46, 61, 91, 136, 151 and 182 days. Yes 182.

You can write down days of important highs and lows an put them in a simple spreadsheet. The lows should coincide with lows and high with highs so for example 46 days from a low you should expect another low, not a high.

This is the plain straightforward method and for MT4 there is an indicator (attached).

Here is an example of a straight forward Fibonacci cycle. Again here you measure resistance points in time. Its a standard tool on your MT4 platform.The currency pair here is the GBPUSD.

This is an example of a Delta chart by Cmellon.
Cmellon has a blog: http://cmellon-deltatrading.blogspot.com/

OK, let me take a dab.

It appears that around 21/22 Sept. Cable might have a turning point, with three different cycle counts emerging around there.

One more chart, with a different range end.

Thanks Oshawa,

Yes Sept 22 is an important day for all usd crosses.
Which method did you use to arrive on this date?

For all new readers who are not familiar with cyclical trading, cycles can come early or late, but not by much +/- 1 day.
It is just like using Fibonacci retracement levels, they don't always exactly stop at your 23.6, 38.2, 50 etc levels.

But on 9/22 the exact time is 14:14 hrs. Also 9/24 is an important day and imho a stronger turn day then 9/22, so that should take priority.

Here an example of a match between price and time as Gann described it.
Gann was looking for those angles that gave most resistance between price and time according to his Law of Vibration.
That means that on his SQ9 or SQ144 or Hexagon Chart or whatever he was using, resistance points needed to come together with a planetary cycle or resistance point.

The EURUSD is showing a nice example right now.
The 2578 low and 2920 high on this chart coincide with 2 of those points.

2578 is a match between a Jupiter support and a 330 degree value on the SQ9.
2920, which has been holding several times now, is a match between the Saturn resistance according to the Universal Clock and the 135 degree SQ9 value.

It looks like they are short term values, but it is clear that to go significantly higher 2920 needs to be broken and on the downside 2578 needs to be broken.

I guess that 12920 level is perhaps better described as Pluto resistance. 12578 at the moment is opposition to both Saturn and Venus on the circle of 24 clock, on that date 24/8 it was perhaps Venus support plus north node opposition on the clock.

At the moment, my main drag with all this is that there are just too many things to look at, and it's mostly a post-hoc rationalisation to decide which one is the one that supports/blocks price actions, with what angles/aspects. I guess it's a matter of experience. That's why I instinctively like geometric spreadsheet calculation of dates, just set various formulae and key in the dates, and see which dates might be important and then judge by price actions. Numbers don't lie. Interpreting stars is a different matter.

Eurusd dropped almost 200 pips since my post.

There is not much to hold this from falling deeper.
The 2920 was a match in time and price and dropped to 2680 support.
From here it looks like we will still go up a little before we try 2680 again.

Do you mainly use Long's method? On your chart you said Jupiter in Aries, but it's been in Aris for a while before that. Why did you pick that as a signal?

Edit: In addition, I would like to know what scale you used to obtain 12680 level. I put it in spreadsheet, if use scale 1:1 pip, at 180 degree down it's 12691. I vaguely remember reading in one of the too many ebooks that Euro should do with a 5-pip per unit scale, in that case, at 90 degree down it's 12667. But there is no 12680. How did you get that number? In addition, the time unit is also important, it's all a matter of scale. When you said 12680, how many units of time (or in terms of numbers of what-minute bars) did you mean?

(On a not-so-important side note: man, your chart candles are really dark. Is that configured to suit your sharp eyes?!?!?!)

Ahh, nice info here!

Will be studying it today, cheers

But it went retrograde to it crossed it again.
You need to look ate the 30 degree multiples. 0, 30, 60, 90 etc degree.

The zodiac is 360 degrees, 12 signs, so 1 sign is 30 degrees.
Every time one of the major planets for usd cross a 30 degree line, you will see market action opposite of the trend.
Majors are: Sun, Saturn, Jupiter. The others I don't use.

The 12680 is from the Univeral clock method. You look at Saturns position and take the range that the clock gives you. For today saturn is in 05LI03 that converts to 182 on the price chart and that gives a range of 110-134.
To convert that to price on eurusd you write: 1.10 to 1.34. Then from 1.10 you draw horizontal lines every 240 pips.
The real range is 1.10 1.34 that is where the main support and resistance is, but every 240 pips there will be s/r as well.

The units of time are important and on our chart it should be 1:1.
Gann used 1/8 inch for each unit of price but he was trading beans etc. In forex the price goes per 1/1000th of a dollar.
But.....a price/time match is also when price hits a crossing of 2 planetary lines, which is in essence a planetary aspect.
This can be calculated with the planetary sq9. Or like I did in this case at 2920 a saturn line and it was also 330 degrees on the SQ9 and Jupiter changed sign, so in this case 3 things were working.
Just like fibonacci levels chances of a turn are greater when more cycles come together.

That 2920 being at 330 degrees I looked up 292 on the sq9 and you'll see that the 330 degree line goes right through it. I must say that 330 is not major resistance.