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would be tempering your bearishness knowing that the one year cycle was due, and that many final stages of markets end with blow off types of moves where either sellers or buyers are exhausted. Thirteen weeks from the high or 90 calendar days is 9/30/83, and price struggles in a sideways move into that time frame. Remember, thirteen weeks will often end a blow off move, but it is, also, a turning point that can run from a high to high, or a low to low, and is not always a high to low and visa versa.
The low on 8/12/83 was 52 weeks from the August, 1982 low. The high hit on 7/29/83 is, also, a good place to start a cycle. Always check the first lower high and first higher low for cycles. So, from that 7/29 high, 13 weeks is the week of 10/28/83. and price is showing a high momentum move down. Remember that the 90 day cycle can terminate anywhere from 90 to 99 days, in extreme momentum. That is what happened in this case.
Now, look at the week of 9/5/86. Prioe was 52 weeks from the 9/6/85 the second, lower high from which a significant move started. Also, it was 13 weeks from the high on the Value Line, and 90 weeks from the 12/14/84 low. Prioe moved up into this week and by the end of it, the S&P had reversed down from a double top with a serious divergence in price on the Value Line.
Remember that Gann eaid that you could look for top on 45 weeks, which is 315 calendar daye, or 45 calendar days short of a full year cycle. Ninety weeke is obviously twice the 45 week count, and 1/4 of the circle in weeks. This is 630 calendar days, or 90 days short of two full yeare. Time ie the most important factor in this analysis, and these cycles are good measures for change in trend, and in most instances, can be qualified in advance. However, there are casee when the price action will fool you. Lete look at one of those instances.
In the week of January 10, 1986, price was up for 13 weeks, or 90 calendar days. It was two years, or 104 weeks from a high, and fifty percent of the range from the July, 1985 high to the July, 1984 low, came in that week. Ae to price action, the market breaks the 2X1 angle up from the low, with an outside revereal week. Price looks quite bearish, although on the monthly chart, price would still be in a very etrong poeition. Thie price action, as well as the cycles, would be more than enough evidence to position a short trade during that week.
Of course, looking back at that period of time, you can see that a short trade was a failure, or at least not exceptional, and the filter you should uee on an outside reversal day, week or month is to wetch for price to trade below the low of that reversal. In this case, price did not do thie, but even so, this type of action could cause you to be bearish. This is eomething you should avoid. Try not to become too bullish or too bearish at any etage of a market, as it will cloud your analyeis with expectations.
The next series of cycles to come out after that week is the 26 week count from the July,1985 high during the week of January 24th, 1986, which, also, is 78 weeks (1 1/2 years) from the July, 1984 low, and a significant time period, particularly since 52
weeks from that low was the July, 1985 high, you could assume that this would be a strong cycle. In addition, time was 180 weeks.
Now look at the Value Line dally charts (Illustrations 9.6 & 9.7), during that time period of the week of January 24th, 1986. Price shows a triple bottom and then breaks up above the angle down from the high, confirming the support of the lows. From dally price action, and weekly cycles, you could assume that there was a good chance of a continuation of the bull trend, at a minimum, it was not a time to be bearish, and you should be out of any short positions you might have taken in the week of the 10th. Support is then shown on the support angles up on January 30th and 31 st, indicating that the 26th week, 78th week, and the 180th day (same as 26 weeks) cycles could be the start of a move up, and possibly one of a multi-week nature. This move could last for 11, 13,22,or 26 weeks.
In a strong move, the first important cycle to look for a trend to reverse is the 30 calendar day cycle, especially in a move against the trend. The second is 60 days, and then 78 (11 weeks), and 90 calendar days.
For a look at a valid setup from the 30 day reversal cycle, look at the S&P daily chart. You will notice that 30 calendar days corresponds very closely with 22 market days. Thirty days from the low on 8/4/86 is 9/4/86, and price is at a double top in this time frame with the Value Line showing a lower high at the eame time. The 2X1 angle running up from the Auguet low on the S&P hits the price level of the previous high (in July) on the date of September 4th, and that 2X1 angle on this chart, with the half point scaling, is, actually, a 45 degree angle on a one point chart. This is the square range on the daily chart. Since the high on that dey is almoet exactly the eame price as the high in July, price and time are aquared on a 30 calendar day cycle, with a square of the range on the daily chart, and a possible double top. This is definitely a good setup for a reversal from that 30 day cycle.
Again the 11 week cycle is 78 3/4 calendar days, and is a cycle that can run from bottom to top or top to bottom. If this is to be the case, the turn will come very close to being on the 78th or 79th calendar day. Price action going into that time frame will make it obvious as to what the likelihood of a revereal ie, at that time, just as with the 30 day example, above.
Price movement is Important to judge the likelihood of a cycle being a reversal. I hope you will do your best tc develop an understanding of what price action is indicating, any particular time. All successful traders have this knowledge. Go through charts, the Value Line weekly, and othere. Look for the changes m trend that comes in cn the 11th week, and you will see that if it is to be an Important turning point, more often than not, there will be other cycles expiring. An example is the week of 6/24/83, the 315 day count, or 45 week cycle expires, and on 5/3/85, and early October, 1985- where a three year cycle expires (156 count).
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The key to understanding the use of the cycles is to look for shorter cycles to expire at the same time as longer ones. The low in the week of 8/8/86 was 30 days from high, but 208 weeks from the low (4 years). The September high was 52 weeks from a second lower high and 90 weeks, or 630 days from a significant low.
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