The icape Cycle Indicator measures price and volume relationships which form in the market over time. As these cycles progress, they often turn into highly predictive and recognizable formations. By understanding what type of pattern is developing, we often know what the next market move is likely to be.
The icape Cycle indicator looks like a "squiggle".
A valid signal comes from a trendline which has:
1. Positive slope
2. At least 3 nodes
3. The 1st and last node
must be on the
trendline.
Here is the signal which meets the criteria.
The Sell Signal marked "SELL" occurs when the indicator passes down through the trendline.
The 2nd node (the one that is not on the line) must always be within a certain distance of the trendline which connects the 1st and last nodes.
A buy signal comes from a formation which has:
1. Declining slope of the last (2) peaks.
2. Positive or level slope of the last (2) troughs.
3. Indicator rises up through the
triangle
formed.
Trendlines for Buy Signals require only 2 points in order to be valid.
Here is the Buy signal which meets the criteria.
The Buy Signal marked "BUY" occurs when the indicator passes up through the triangle formed by the intersecting trendlines.
Buy Signals come in all shapes and sizes. A smaller formation does not necessarily predict a smaller move in the corresponding index. All Buy Signals have the potential to predict a significant market move.
