The Laws Of Cyclicality by Dirk Vandycke
Trends do not continue forever. The life of a trend comes to a point where it stalls and reverses or temporarily stalls before resuming. How do you recognize when the trend has ended? Let’s explore.
In my previous articles in this series on market mechanics, I discussed gravity, capacity, and inertia, which are the dominating forces in the financial markets. In this fourth part, I’ll take a look at the cyclical nature of markets, which is an inevitable consequence of those forces.
ALTERNATE UP AND DOWN MOVES
In my earlier articles I discussed the existence of a feedback loop in the financial markets from the perspective of system dynamics. People react (based on emotions) to the input of the system (fundamental and macroeconomic) and to what happens at the output (price action)...