Cycle Indicators

Cycle indicators are oscillating indicators that can be used to analyze market cycles. According to cycle theory, stock markets have a tendency to oscillate in cyclical patterns, or waves, from periods of bullishness to periods of bearishness and back to periods of bullishness, and so on. These cycles appear to be repeated with a degree of regularity that allows technical analysts and stockmarket traders to forecast and anticipate price reversals at key cyclical intervals. However, shorter cycles are present in shorter time frames with smaller cycles operating within larger cycles. It is this phenomenon that makes cycle analysis difficult as, at any moment in time, a shorter cycle may be moving upward while the larger cycle is moving downward.

Fortunately, there are several cycle indicators, such as the Commodity Channel Index (CCI) and the Detrended Price Oscillator (DPO) that can be used to analyze the cyclic nature of securities and stock markets for a given timeframe.