My dad, Walter Bressert, from the beginning, used a Simple Moving Average (SMA) detrend to help him identify cycles.
I went two steps further.
1. I held the price distance from the SMA above and below the SMA.
2. I added a Last (Close) Value of where it closed. Meaning the distance from the SMA.
Why is # 1 so important?
It is because I had to see if the detrend bar's low below the SMA was higher than the last low after 15 bars. Keep in mind; we like to see past the 20th bar more often. I have 15 because this bar count can happen, and we did not want to lose sight of this count. But, we look more for 20 plus up to maybe 28 to 32?
You will know this count better on each live market move because you are waiting for a drop below the SMA. This will cause out CT 07 SMA Detrend to turn red. I see this over 95% of the time. This means 5% of the time; it may not drop below the SMA, which means the market is extremely bullish that day.
What happens if the market is trending down?
Good point! This means your SMA and price action will be lower and lower for the most part. So, go back to the cycle count. When trending down, it will most likely be a cycle bar count of 22 plus. Follow the detrend cycle lows. When the market is moving lower each bar, so is the SMA. So, you may see the lower detrend bar lows move up even if the price action is the same price as the previous bar.
How to trade this?
Well, this is the reason we are here, right? There are four trade patterns:
1. From Trading Cycle Low to Alpha High
2. From Alpha High to Alpha Low (1st low from the TC Low )
3. From Alpha Low into the Beta High
4. From Beta High into Beta Low (Trading Cycle Low)
Let's cover the basics.
1. Wait for the most part 20 plus bars from last Trading Cycle Low
2. Wait for the price action to drop below SMA. (we use a 15 period, but you can play around with other periods)
3. Wait for the bar lows of CT 07 (you can find this in Extra Indicator folder) to be higher than last lows. This is the first sign for a Trading Cycle Low.
What to expect from the TC low?
It has been our work that most markets will go 4 to 9 bars in one direction. So, 4 to 9 bars up. The market can also go sideways.
If the low is false and drops again, then look at the support and levels, see where you are from the last high, is this just a temp down move? But eventually, the market will make a TC low.
More information + video - Here
P.S. Something to think about. If + 98% of the time Trading Cycles happen when price action drops below the SMA, then if the market is still above the SMA at + 25 bars from last TC Low, you can anticipate a drop below the SMA to make the Trading Cycle Low. This is exactly what happened today, Sept 25th in the indexes, 5m charts at the end of the day. Keep in mind that markets trade above the SMA when moving up and below the SMA when trending down. Large moves can hold these patterns. So, if long, then be aware of these patterns and maybe lighten up or exit. Especially if late in the bar cycle count.
Sept 25th ES Chart - TC-CycleTrader-Low.jpg
All these cycle counts and cycle titles are now part of CycleTrader. You don't have to sit there and count bars, the indicators will do this for you so you can make money trading and not count bars.
Here is a current ES 500 Chart 9-25 at 9:15 pm. You can see how the TC low to low is active at night too.