The Handbook of Technical Analysis + Test Bank_ The Practitioner\'s Comprehensive Guide to Technical Analysis ( PDFDrive )

the hAndbook of technIcAl AnAlysIs

For Even Dominant‐Cycle Periods Since N = 40 (even number of periods),
each formula will yield the following half‐cycle lookback period:

First Formula: (N+1)/2

(N+=+=1 2 40 1 2 20 5)/ ( )/.

Rounding up as is evenN = 21 periods

Second Formula: (N/2) + 1

( / )N 2 1 40 2 1 21+=+=( / ) periods

No rounding down required as N is not odd.

Third Formula: (2N+3)/4

( N+=×+==) / (( ) ) / / .2 periods3 4 2 40 3 4 83 4 20 75

Rounding to the closest integer = 21 periods

For Odd Dominant‐Cycle Periods Let us now assume that the dominant cycle
period is an odd number of periods, that is, N = 47. Each formula will now yield
the following half cycle lookback period:

First Formula: (N+1)/2

(N+=+=1 2 47 1 2 24periods)/ ( )/

No rounding up required as N is not even.

Second Formula: (N/2) + 1

( / )N 2 1 47 2 1 24 5+=+=( / ). periods

Rounding down as N is odd = 24 periods

Third Formula: (2N+3)/4

( N+=×+==) / (( ) ) / / .2 periods3 4 2 47 3 4 97 4 24 25

Rounding to the closest integer = 24 periods

Figure 12.11 is an example of tuning the fixed percentage bands to a domi-
nant cycle on the four‐hour chart of GBPUSD. The trough‐to‐trough cycle period
was 133 bars. Using the third formula would also yield ((2×133) +3)/4 = 67.25.
Rounding to the closest integer would give us 67 periods or bars. We therefore
set the band periodicity to 67 bars. The band’s percentage of central value was
derived via visual inspection.