Cycles of Time
Up to now, time has been an intrinsic and accepted part of our discussion, but we haven’t focused on it. Most of the information has been about price movement, and time has been included by default. But some analysts believe that time is much more important than that, and that it may hold the secret to why markets move up and down as they do. This expands the realm of technical analysis beyond the question of simply which way a price will go, and how far it will reach in terms of a target price, and introduces the question of when it will get there, and even when the move will start.
Time is obviously relevant, as the patterns we’ve discussed take time to form. Support and resistance lines are considered to be more firm the longer they have been in existence. Oscillators and moving averages require numbers related to time to be entered, and their accuracy is dependent on the correct selection. Chart patterns may take on different meanings depending how long they have taken to form. So everything depends on time, but we haven’t taken a concerted look at it yet. That is the purpose of this section.
Cycles
Time cycles are all around us. Some are obvious, such as the 24 hour day and night cycle, and the 365 day yearly cycle. Biorhythms, with three different periods that are supposed to commence at birth, are claimed to affect our emotions, health, and ability to perform work. Cyclic analysts claim to have found cycles in virtually everything, and have come up with some surprising data.
For instance, seemingly unrelated events that exhibit a cyclic pattern have the same time period, and they tend to act synchronously, that is to have their low and high points at the same time. A example given by Edward Dewey in his book ‘Cycles: The Mysterious Forces That Trigger Events’ is of an 18.2 year cycle which includes marriages, immigration, real estate sales, construction, and stock prices. In fact he went further than this, and found a 9.6 year cycle which included caterpillar abundance in New Jersey, coyote abundance in Canada, the price of cotton in the US, and the farm acreage committed to wheat in the US. these items all seem totally unrelated, and yet they share a common cycle. There are many other odd time periods affecting both natural and man-made occurrences.
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