Fundamentally, time is the most important factor to financial market analysis. An observance of specific important time periods will enable the observer to anticipate future time points, at which markets are more likely to change their behavior.
Consideration of the 90 year cycle is usually a good starting point. The relevancy of this particular amount of time elapse, stems from the first order recurrence, or conjunction time between the planets Saturn and Uranus. Accepting the 90 year time period’s importance, it follows that its harmonics should also be important as far as market change is concerned. Important time periods that I use that are harmonically related to 90, are 45, 180, 270, and 360. A simple application of these periods starts by selecting a starting point in the markets history.
The time forecast’s reliability, is directly a function of the correctness of the selected start point. The start points selection is based on whatever about the market seems to be significant at that point. Once the start point is chosen, you simply project out by the various time periods. The endings of the time projections are the time forecasts. The analysis is more meaningful when repeated from different starting points. When different projections, which emanate from different starting points, happen to end up at the same point out in the future, that coincident ending point, takes on correspondingly greater significance. Exploiting this harmonic concept for intraday trading purposes, I’ve found that 23 ten minute bars, or 230 minutes is an interval that correlates strongly with system changes, or trend reversals. Procedurally you should select tops and bottoms that “stick out”, as starting points. The ends of such projections mark theoretical time targets.
Another, technique to project turning points in time, makes use of some important fibonnacci ratios. The process begins with the selection of a “time period”. Similar to the above analysis, where a “start point” is selected by virtue of its determined degree of importance, so to is the selection of an important “time period”. Generic types of time periods, for example, might be from one bottom to another, from one top to another, one bottom to a top, and one top to a bottom, etc. Once a specific time period is chosen, its harmonics are obtained by multiplying the amount of time, by the following: .618 .79 1.27 1.618 ratios. The four results derived are then projected from the end of the time period. The ends of the projections represent the time forecasts. The process should be repeated at least three more times using different time periods. What you are looking for are coincident end points that are derived from different time periods, i.e. clusters.
For both of the projection techniques above, time is marked off using calender time, so weekends and holidays are included in the counts. The more “starting points” that you select (for the Harmonic of 90 method) and the more “time periods” selected (for the fibonnacci method) the greater the possibility for clusters to occur as the database of projected time targets expands. Again more importance is attached to the intra and inter analysis time clusters you can find.
To learn more about profiting from time projections tune in to my webinar presentation this Saturday (12/07/13) at 9:00am Pacific Time.
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