THE HAnDbook of TECHniCAl AnAlysisfigurE 20.12 Principle of Synchronicity in Action across Different Markets and
Periodicities.
It should be fairly obvious that it is the shorter‐term cycles that determine
whether a market top is a head and shoulders or a double top formation. The
shorter cyclic component is associated with the behavior of shorter‐term traders
and participants in the market. The trend component is associated with the
behavior of longer‐term participants and investors in the market.
Principle of Commonality
The principle of commonality gives rise to another principle, namely the Principle
of Synchronicity. The principle of commonality simply states that cycles across
various markets are related in the following ways:
■ (^) They all tend to share the same periodicities.
■ (^) They all tend to top and bottom at the same time (Principle of Synchronicity).
■ (^) They all tend to be cyclic or oscillatory in nature.
Principle of Synchronicity states that different markets tend to top and bot-
tom at the same time. It should be noted that there is no requirement that the
markets need to be of equal periodicities. This means that there is also a tendency
for markets with different periodicities to top and bottom at the same time. See
Figure 20.12.
This is clearly evident during periods of severe market reversal. Markets tend
to move in lock step during a crisis. In Figure 20.13, we see the global markets
moving in synchronicity with each other. This is a global expression of the prin-
ciple of commonality in action.