Our friend Harish had asked about hourly time cycles of Nifty and whether we could use them for trading.
We definitely can! Cycles are as valid in shorter time frames as they are in longer time frames. However, they are less stable than the longer cycles and so we should use them with other technical tools.
Have a look at this chart....
We can see how, near an important low, both the cycles came together.In fact the rally which occurred after that August 08 low, took every one by surprise, in its aggressiveness,With this cycle info, we could have traded the rise confidently.
Sometimes we see the market lows forming just after the cycle lines or before them. That is where we se other technical tools to understand the movement better and time ourselves.
I have measured here the cycle displacements by those small, coloured rectangles.
Those are expanded in the chart here....
The rectangles and the bars are more visible here.From the left rectangles, we infer that the red cycles were 18 bars late and the blue cycles were 18 bars early.
The next blue circle is due within 8 bars.That means another market low is due by eod tomorrow or, the blue cycle is early by 8 bars and the market bottomed out today.In other words, the late phase of 18 days has been reduced to 8 days.This is only a possibility.
To narrow down our choices, we look at other technical tools..
Nifty has broken out of the downward sloping channel and closed below it. So some more weakness is indicated.Hourly momentum is oversold but has not bounced yet.So we wait for a strong reversal signal. That would also mean one of the cycles has bottomed out and it is time for going long.
But only after we get a reversal confirmation.
Or else the market could still go down.Any which way, since the cycle is due within 8 bars, ( 1 day), we should know in a couple of days.
The longer red cycle is due between Oct 23 and 26. So between tomorrow and October 23, we may expect a top. If the top takes time to form, then we are going much higher. If the top is formed within 18 bars, then we will be going down further.Which means it would be time to short the market.
In the further right side of the chart, we see one of the blue cycles bottoming out on November 03.
Remember in an earlier post I had mentioned the possibility of a daily cycle bottoming out by November 03 to 06th? That could be a good low.
Astrologically, we are in the mid period of Mercury retrograde.So a trend change is possible. Tomorrow, retrograde Mercury meets his Master, the Sun.We will be on the 7th trading day after Venus squared Pluto.There is potential for a low.
Rest, of course is in the hands of Lord Shiva.