Description: Learn to understand and recognize a new cycle
Tags: finance,market,markets,market cycle,fundamentals,technical analysis
Description: Chevron stock (CVX)
2 days chart showing both bullish
and bearish mini price moves.
During a bullish cycle, the prevailing market force is bullish.
The trend is primarily composed of mini bullish cycles but there
are also secondary diminutive bearish price-cycles which are
contra trend price-action. Refer to the chart above.
The opposite occurs during a bearish market phase when the
number and magnitude of the mini bearish cycles are greater
than the bullish ones. Check the first chart below.
In a trending period, both the Moving Average
Convergence Divergence (MACD) indicator and moving averages
themselves depict the trend, but the slow stochastic indicator
mimics the minuscule cycles within the trend.
Description: General Electric stock (GE)
weekly chart showing both bearishand bullish mini price moves in a downtrend.
With the exception of the tiny price moves, the stochastic also
uncovers all support and resistance levels when it is oversold below
25 (support) or overbought above 75 (resistance).
Description: Intel stock monthly chart
showing the overbought and oversold
slow stochastic (6,3,3) respectively at
resistance and support levels.
A resistance will become a support if the asset breaks above it
and finds support (continues to exhibit higher lows and higher highs).
On the other hand, a price support level will change into a resistance
at the time when a financial instrument fails to rise above it after breaking
below it. The security will continue to display lower lows and lower highs.
daily chart showing a
resistance which has been
converted into a support.
Description: USDSGD weekly chart
showing a support which has been
converted into a resistance.
In an up move, one will identify a valid support price level (usually
the previous high which is now retested) where one can buy the asset.
Conversely, in a down trend, one will spot an opportunity to sell at a
compelling resistance level where one can sell on the edge. This method
of buying and selling is called trading on the edge. Subsequently, in a
down-cycle, one will give precedence to bearish trades, but will prioritize the
bullish trade setups in a rising cycle.
Description: GBPUSD daily chart
showing buying points during an
Description: AUDNZD 3 days chart
showing selling points during a bearish
The slow stochastic allows day and swing traders to accurately time
the market throughout viable rending phases without trading against
MACD and moving averages. This trading strategy of aligning both the
stochastic oscillator and MACD indicator is called harmonious trading.
Traders ought to understand that the price is the number one indicator.
They should draw channels to underscore the market patterns and apply
a slow stochastic multiple time frame trading (top down) method to avoid
damaging errors. We propose to traders the webpage titled slow stochastic reloaded.
Image: Market cycle with a top and low