Tuesday, May 8, 2018

Nested envelopes for cycles

Most of my posts use semi-circles to show cycles.  On April 1 I showed you the use of  "sine" waves as an alternative way to show cycles. 

Bit, there are other ways to visualize cycles.  Lots of people like Moving Averages (MAs) to analyze price movement.  We can use envelopes (based off MA offset above and below MA).  Time shifting 1/2 the  cycle span  centers the envelope.  To extract maximum information we nest cycle envelopes.

Here is an example - Russell 2000 Index:

Note  difference in MA lengths  (20 and 40 days), time shifted (10 and 20 days)  (2.5 and 3 deviations from MAs which are not shown)

Good Luck traders

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