V.7:4 (112-114): A simple cycle finder by Curtis McKallip Jr.

V.7:4 (112-114): A simple cycle finder by Curtis McKallip Jr.
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A simple cycle finder by Curtis McKallip Jr.

Cycle signatures are patterns created by cycles. If you're familiar with Fourier analysis and maximum entropy methods of cycle analysis you know they produce a pattern called amplitude spectra which requires a computer to calculate.

In some situations where you might not wish or be able to use a computer, I have an effective method that, compared to computerized mathematics, is crude. Literally, it is a back-of- the-envelope method. Yet it is fast and gives you critical information identifying when your next trading window will arrive.

This method tells you about the variation in timing of cycles as well as their length. In the following procedure, assume you are looking for cycles of lows (The steps are similar for highs):

1. Get a price chart showing at least four or five cyclical lows. The longer the time period the chart covers, the more information you gain about the cycles.

2. Using a ruler, mark a vertical line through each low you consider to be important (Figure 1). You will have to decide what magnitude of low is important.

3. On the edge of an envelope or sheet of paper, mark a 1-inch vertical line which I refer to as the starting mark. Place this line next to the first cycle low on the price chart.


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