This Cycle Outlook has been kindly provided by William Randall.
The analysis is provided for your consideration and is not to be construed as financial advice. Please bear in mind our disclaimers which apply to all posts on this site.
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In my prior post I stated that I was a proponent of Hurst’s numerical analysis approach to phasing price waves in the data. The primary tool for extracting the waves is the use of bandpass filters. In the chart below (hourly data) I’ve taken the output from one of my dominant filters of the NQ and created a custom nominal model in ST based on the average period of the wave. The average period of the wave is based on over 100 oscillations dating back almost four years. I reiterate that there are differences between a numerical analysis using bandpass filters and ST’s pattern recognition approach, but the differences in terms of phasing and harmonic relationships of the waves become less pronounced as the waves get shorter.
As you see this particular price wave has put in a series of lower lows and lower highs over the past month. Judging from the associated VTL and the time of the next projected peak, this wave is unlikely to break the down trending VTL, let alone exceed the prior cyclical high, barring an advance equivalent the most recent leg down.
One can use a smaller sampling period and zoom in to shortest dominant waves in the data to fine tune the entries and exits of your trading cycle.
