There is no Holy Grail in trading, but I have found that compared to other professional methods the technique of Cycles greatly improves the probability of success. All Market Assets rise and fall in Cycles. Acknowledging the power of Cycles improves market timing and gives a big edge in achieving superior returns.
Cycles add the element of time in trading. Overbalancing in price and time is very important to identify a change of trend very early and to accurately time major bottoms. Here are some examples of Cycles’ Lows in different assets: Gold, SPX (US Index), Dollar. You can notice that Gold follows an 8 Year Cycle composed of a 3 and a 5 Year Cycles, SPX a 4 Year Cycle and the Dollar a 3 Year Cycle.
Knowing the Long Term and the Intermediate Term Trends is the minimum requirement to be successful in speculation and investment.
My Cycles’ tool completed sometimes with institutional technical analyses helps me to determine future Price Action and tells me not only what is most likely to occur in the future but when will it likely occur.
I do not use any indicators at all as they are always lagging the Price Action, I only follow the Price Action which is the most simple and uncomplicated tool for my technical analyses. Respecting Price Action and setting up the best odds is Key to be successful in trading.
Elliott Wave & Sentiment Indicators
The Elliott Wave principle is a powerful forecasting tool that defines a context to analyze the market. It is mainly used by financial institutions and hedge fund managers as it can indicate very accurately the next price movement, alert quickly when something is wrong and most of all, define important turning points for buy and sell signals. Using properly Elliott Wave rules reduces the number of valid scenarios to a minimum and completed with other tools, I find that Elliott Wave Principle offers an exceptional value.
I also use Sentiment Indicators as the market movement is closely connected to the psychology of human behavior and driven by emotions (hopes, fear, greed, euphoria…). For example, based on the sentiment, the majority of traders think the risk is the highest when something is down but the basics of trading is to buy lows and sell highs. Sentiment Indicators help to better understand trends and avoid decisions based on emotional status.
I mainly use the Technique of Cycles but also Price Action, completed sometimes with Elliott Wave Principle and Sentiment Indicators to analyze the market and to identify market tops and lows. Combining these powerful techniques brings a highly efficient process of analysis to maximize gains.