The cycle is the cycle, and the cycle is the event or trading cycle. Many events occur in the financial markets, from a rise or fall in price, which is repeated regularly.
The cycle is present in many things in addition to the financial markets. The cycle exists even in the four seasons in nature. One of the basic and important parts of technical analysis of the financial markets.
The strength of the cycle is what drives prices and their movements in the financial markets, which are long or short-term.
Bicycle jobs
There are many uses for trading cycles, including:
- Use price and time cycles to anticipate turning points.
- Use the lows to determine the length of the cycle and then predict the lows for the future cycle.
Cycles are things that change over time and they can also disappear but only for some time the trend remains the same and the markets move within the trading range it can reverse if prices change direction and cycles can also reverse so cycle analysis is not expected to It determines the highs and lows of the interaction and so cycle analysis is used with other aspects of technical analysis together to anticipate turning points.
Cycle strategies and currency market stages
There are three cycles for each financial market, they are called trading cycle strategies, and they are:
trend cycle strategy
The trend strategy is the most effective strategy in the currency cycle when the value of the currency is steadily increasing or decreasing and here the market creates more highs when growing and more bottoms when falling, which makes identifying this cycle correctly is very difficult and usually cannot be connected with a straight line Here, the trend cycle strategy is considered the most appropriate and the highest in the rates, as their failure or success rate can exceed 50%, which is determined with higher efficiency according to this strategy.
Unification cycle
In the case of indecisive markets and the stability of the value of the currency as it is without change, which means that there are no new tops, highs, or even bottoms, it is preferable to use the strategy of the consolidation cycle because it is more suitable in identifying side trends than trend strategies.
Breakout Cycle Strategy
It is a stage between the market trend and consolidation that occurs when the markets slowly begin to show an evolution in the value of the currency and a new direction of the trend and here many fake breakouts appear, which calls for the need to identify the breakout correctly as well as use trend strategies with it to make sure that you take full advantage of them and scalping strategies can also be used for technical analysis With them.
Cycle characteristics
Several characteristics distinguish trading, including:
- Cycle length: Low levels are usually used to determine the length of the cycle as well as the width of the future cycle. Here, the cycle height can be expected somewhere between the lowest cycle levels.
- Translation: Cycles usually peak before or after the middle of the cycle, and they never occur in the middle or when the expected cycle falls at the bottom. The correct translation here is that prices tend to peak in the latter part of the cycle when markets are rising. Conversely, prices tend to peak in The middle of the first cycle during bear markets ie prices tend to peak in bull markets later, and the first time they tend to peak in bear markets.
- Harmonics: Here, the large cycles are divided into smaller and equal cycles, such as a forty-week cycle that is divided into two cycles, the duration of which is twenty weeks, and sometimes the cycle can be divided into three parts or even more if it is large. Small cycles can also multiply into larger cycles, for example, the cycle that A ten-week period grows up to a twenty-week cycle, and so on.
- Nesting: Low cycle is enhanced when several cycles indicate the same time and here the cycles of eg 10 weeks, 20 weeks, and 40 weeks overlap and they all overlap at the same time.
- Inversions: A high cycle occurs when a low cycle should occur and vice versa, often when a high, low or minimum cycle is skipped.
Examples of Cycle's presence in the market
There are cycles or cycles in many things in the market, including:
- Energy: It means the stocks of this sector usually appear in the summer, and these stocks include COP and XOM stocks, which will rise soon in the summer.
- Economic GDP: GDP-based cycles are considered one of the fiercest cycles versus technical analysis. The economy usually grows at the end of the cycle and the market begins to rise, which makes it disastrous for consumers as a result of their mentality and their lack of understanding of traders or the reason for this economic growth. All they know is that this time seems The most suitable for them to enter the markets, they believe that they have sufficient evidence for this, and often the market begins to decline after that, even if the economy continues to grow. Another reason that makes this a disaster for consumers is their lack of knowledge of the main reason that made the economy begin to decline, and this happens in the future as a result of For the mutual relations between foreign markets and the dollar, which leads to a slowdown in their purchases of locally made goods, and then believes that the economy is at the forefront of the situation, which means that companies are moving to their safe zone and then laying off workers, which means the deterioration of the market and the occurrence of a rise hereThe consumer starts to panic and they buy at the top and sell at the bottom which is the exact opposite of what the consumer should do.
- Technical cycles: It means understanding the motive waves that move the stocks, and when the stock moves to its range, it will make the trader reap profits, which means supporting the stock and starting to buy again. This is called the term average potential return or payment. Examples of this are when the stock moves even by 10 Only pips in the previous impulse wave as well as another 10 pips move will make the traders reap their profits because they will not hold the probability point.
Cycle elements in the forex market
The cycle in the world of forex is not much different from any other cycle or cycle, everything has a pattern that is repeated or a role that passes through it, and here you just have to know the country and then trade it. In the forex market, the course revolves around three things:
- Opening the bank: There is a lot of business and movement that occurs in the forex currency market and is linked to the opening of the market and this happens when the bank is opened.
- The bank is closed: in this case, the deals are easy, but the probability of trading is higher when the bank is opened, as well as the possibility of a better profit when the bank is closed.
- News-Based Events: Economic reports are the number one reason why markets move. Therefore, economic reports are usually discussed in news bulletins, in addition to reports from Forex and other economic systems.