JM Hurst defined two cyclic tools:
- The Future Line of Demarcation (FLD)
- and the Valid Trend Line (VTL)
The FLD (Future Line of Demarcation)
What does it mean if price crosses an FLD?
There is a reliable sequence to price and FLD interactions (see the FLD Trading Strategy). You can learn to identify where we are in the sequence by watching our free videos:
- If the price cross is an A,D,E or F interaction you can calculate the target for the price move, and trade accordingly.
- You receive a Hurst Cycles Alert which tells you that the S&P 500 has crossed above the 40-day FLD.
- Because the S&P 500 is bouncing out of a 20-week cycle trough (check out our forum for current analyses), you know that this is an A-category interaction.
- You know that the target for the cycle move is at a distance beyond the level of the FLD which is equal to the distance from the 20-week cycle trough to that FLD .
- You enter a long trade to profit from that move.
The VTL (Valid Trend Line)
What does it mean if price crosses an VTL?
When price crosses a VTL we know that:
- a PEAK (if price crosses BELOW the VTL)
- or a TROUGH (if price crosses ABOVE the VTL)
- of the cycle one degree LONGER than the cycle the VTL is based upon, has formed.
Therefore you can make trading decisions with the knowledge that the market is being moved by that cycle towards its next peak or trough.
Note: often price will return to the VTL after crossing it, which provides a good entry point for your trade.
- You receive a Hurst Cycles Alert which tells you that the S&P 500 has crossed above the 80-day VTL.
- Because you were expecting the S&P 500 to form a 20-week cycle trough (current analyses are posted to our blog), you know that trough is now confirmed (the 20-week cycle is one degree longer than the 80-day cycle the VTL is based upon).
- You wait for a pull-back to the VTL and then enter a long trade to profit from the move up to the 20-week cycle peak.
What are the Cycles?
Here is a table showing the cycles that Hurst discovered in financial markets:
How Can I Learn More?
Watch these free videos which explain how to trade with Hurst Cycles: