Cycle Analysis
of support occurring at a projected cycle trough is more reliable than an uptrend
line retest of support occurring at a cycle midpoint or peak. Similarly, a down-
trend line retest of resistance occurring at a projected cycle peak is more reliable
than a downtrend line retest of resistance occurring at a cycle midpoint or trough.
Price cycles may also be used to confirm continuation patterns. An intrinsi-
cally bullish pattern or formation occurring after a cycle trough or near a cycle
midpoint will potentially be more reliable as a continuation pattern. The reli-
ability of a continuation pattern starts to diminish as it approaches the projected
cycle extremes. In Figure 20.7, we observe a symmetrical triangle at two locations
within a price cycle. Being an intrinsically neutral pattern, it is neither bullish
nor bearish. Its sentiment is therefore wholly dependent on the contextual and
extrinsic sentiment. The first symmetrical triangle is located at the midpoint of
a cycle. This is bullish based on the assumption that price will continue moving
toward a cycle peak. The symmetrical triangle is therefore regarded as a con-
tinuation pattern. The subsequent symmetrical triangle occurs at a cycle peak.figurE 20.6 Bullish Trendline Retests of Support at Cycle Troughs.figurE 20.7 A Symmetrical Triangle at a Cycle Midpoint.