15 equals 1.5. Rounding up to the next highernumber eliminates the two shortest and two longest. The time rangebetween 10%-90% of the low-to-low bond cycles ranged from 119 to 278calendar days.The time period ofNov.7, 1994 to April 15, 1995 is the equivalentperiod if this time range is projected from the July 11,1994 low. Ninetypercent of the low-to-low cycles lasted at least 119 days (10% wereshorter) and 90% terminated by 278 days (only 10% were longer).
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80% Low-to-Low Time RhythmThe chart below shows the 5%/21CD swings overlaying the continuousdaily bar chart of bonds. The Nov. 23,1993 low to Jan, 28, 1994 highshown in the chart below appears to be an exception to the swing criteria.The data below is the continuous futures data with no adjustments atcontract rollover. The data rolled over between the Nov. low and Jan. highfrom the Dec, to the March contract causing a distortion in the continuousfile. If just the March contract were shown, there would not be a lowerlow between the Nov. low and Jan. high.
The horizontal bar in the indicator window below the bar chartrepresents the equivalent time range of 80% of the low-to-low swingssince the April 1986 bull market top projected from the July 11, 1994 low.The equivalent period to anticipate the next low is the broad period fromNov. 7,1994 through April 15,1995. These dates are the 119 and 278calendar day counts from the July 11, 1994 low.Projecting the equivalent time for a low based solely on past low-tolow cycles will almost always result in a time period that is too broad tobe of much use to traders and investors. There is an additional criteria thatmay be considered that will usually result in a more narrow range of timewith a high reliability for a low to be made.
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High-to-Low Time RhythmA high-to-low projection may be made in the same manner as the low-tolow projection. The overlap period of the high-to-tow and low-to-lowprojected ranges will usually provide a relatively narrow and useful timeperiod to anticipate when the next low should be made.
There were a total of 16 high-to-low swings in the 5%/21 CD data filefrom April 1986 through the Aug, 2, 1994 high. The time range of these16 swings ran from just 23 calendar days to 193 days. As with the lowto-low cycles, this is far too wide a range to be of any use to traders andinvestors. If we eliminate the shortest and longest 10% of the swings, theremaining 80% time range runs from 30 to 122 days. Still too long to beof much use.Time Rhythm Zone - 80% Overlap PeriodWhat if we combine the low-to-low projections from the July 11, 1994low and the high-to-low projections from the Aug. 2,1994 high? Wediscover that the common or overlap period for these two time ranges isless than one month and runs from Nov. 7 to Dec. 2. The overlap period isa relatively narrow range of time that can be put to practical use by tradersand investors.The Time Rhythm Zone Detail table above shows both the low-to-lowand high-to-low time ranges as well as the overlap period.
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The indicator window below the bar chart below shows the timeranges of the low-to-low and high-to-low swings. The overlap period ofthese two periods is the fat bar which represents the period from Nov, 7to Dec. 2. The tails extending from the overlap period represent the fullrange of Lime of H-L and L-L.
I have termed this method of projecting overlapping cycles, TimeRhythm Zones (TRZ). The general concept of overlapping cycles is notnew or original. It has been used and taught by Wall Bressert for manyyears.However, there are critical differences between the old way ofprojecting overlapping cycles and Time Rhythm Zones. Time RhythmZones use the actual, recent market swings, not average length swingsfrom historical data. In other words, the data for TRZs is market driven.Swing lengths may change as a market progresses and new swings aremade.
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Bull or Bear Rhythm?A high-to-low (H-L) swing in a bull market is a counter-trend swing,A low in a bull market is the termination of the counter-trend and thebeginning of a new trend swing. A high-to-low (H-L) swing in a bearmarket is a trend swing. A low in a bear market is the termination of atrend swing and the beginning of a counter-trend swing. If we arecompiling data to project the probable low of a trend swing in a bearmarket, should we include the high-to-low, counter-trend swings that werepart of bull markets? Probably not. Relevant statistical conclusions shouldbe derived from data that compares like to like, not apples to oranges.Trend and counter-trend swings should usually not be included in thesame data series for purposes of statistical analysis. Swings from bull andbear markets should not be mixed together. If our analysis indicates that amarket is in a bear trend and a trend swing decline is underway, we shouldonly use high-to-low trend swings and low-to-low swings from prior bearmarkets to determine the Time Rhythm Zone for a low. If we includedhigh-to-low counter-trend swings from bull markets, the projected TRZwould not accurately represent what we are looking to discover which isthe high probability period for a trend-swing low in a bear market.Trend swings are usually longer in time than counter-trend swings.This applies to both bull and bear markets. If the objective is to project ahigh-to-low trend swing low in a bear market but we include high-to-lowcounter trend swings from bull markets to determine the TRZ, the timerange will probably be skewed to shorter term swings than are typical ofhigh-lo-low trend swings in bear markets. If there is not a confidentopinion of the major trend direction, use all prior swings from hull, bearand trading range markets.The previous bond example included all swings from the historicalperiod without distinguishing swings from bull or bear markets. From theGet 1993 high, bonds had made consecutively lower-lows and lowerhighs- Bonds were considered in a bear market as of the Aug. 1994 top.The objective was to project when the next low within a bear marketwould take place. Rather than use all 5%/21 CDs swings to make the TRZprojection for a low, we should only use those swings from prior bearmarkets.The chart on the following page shows the intermediate (5%/21 CD)and major swing files together. The bar chart data has been removed so theswing files are easier to see. The dashed, vertical line is at the Aug. 2.1994 high. As of Aug. 1994, there had been two completed bull and bearmarkets. Bonds were in a bear market as is evidenced by the consecutive
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lower-lows and lower-highs. If our objective is to project the highprobability period for the next swing low in a bear market, we should onlyinclude data from prior bear markets to make the projections.
The Time Rhythm Zone Detail table below shows the results of onlyincluding swings from bear markets. While fewer swings are used thanwhen both bull and bear trends were considered in the previous example,the output should be more reliable since only data from similar markets isincluded in the projections.The new Time Rhythm Zone period (overlap of low-to-low and nighto-low time ranges) is Oct. 26,1994 to Nov. 28, 1994, The Nov. 11,1994low was made right in the middle of this period.
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The Oct. 28-Nov. 28 TRZ was a product of the overlap period of the80%-range of the prior H-L and L-L swings of bear markets only. EachTRZ should be identified by the percent of swings used. Throughout thisbook, a TRZ is always a TRZ-80% unless otherwise noted. If a TRZ is theproduct of other than 80% of the swings, it will be noted such as TRZ70% or TRZ-90%.
The table above shows the seven low-to-low swings made during thebear markets that were used to make the TRZ projection for the next lowfollowing the Aug, 2,1994 high. The low-to-low periods have been sortedby time range. The range of time is from 61 to 243 calendar days. Notehow the time ranges are fairly evenly spaced out from the shortest to thelongest. This series of L-L swings is an excellent example of how anaverage period would provide very misleading information. The averageperiod of the seven swings is 152 CDs. While one swing fell exactly at theaverage, the rest of the swings are not grouped tightly around the averagesIf you were projecting a "cycle low" for bonds, would you be comfortable considering a target date of 152 days from the prior low as a relevantpiece of information? You shouldn't! Averages are used by averagetraders and investors. Average traders and investors do not succeed inme long run!The chart on the following page shows the Time Rhythm Zone of Oct.25-Nov. 28 for the next low in the indicator window below the bar chart.This period only considered swings from bear markets. The Nov. 11, 1994low fell right in the middle of this period.
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Let's review exactly what information we have when we do a TimeRhythm Zone calculation using the example above.Based on the historic data since the April 1986 high and assuming thesame market forces are in effect during the current period:1- There is a 90% probability that bonds will not make a low prior to Oct.26. Based on past history, 90% of the L-L cycles in bear markets weremade at or later than the equivalent date of Oct. 26, As bonds decline,traders and investors should not be too anxious to consider long positions prior to the beginning of the overlap period of Oct. 26,2. There is a 90% probability that bonds will complete the low by Nov. 28followed by a rally of at least 5% price change and at least 21 calendardays. Based on past history, 90% of the H-L swings in bear marketswere complete by the equivalent date of Nov. 28- If bonds are continuing to decline into late Nov. or so, traders and investors should beparticularly alert to reversal signals as bonds ore approaching The
extreme time when a low should be made.3. If bonds make alow followed by at least a 5% rally in 21 or more daysoutside of the Oct. 26-Nov. 28 period, it would be an unusual situationthat should warn the analyst that the market forces may be changing.The analyst should be alert to other potential extreme price or patternactivity that may also signal a fundamental shift in market structure.
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Multiple Degree Projections Provide The Most Reliable SignalsIn all areas of technical analysis, we should consider at least two degreesof change in order to provide the most reliable trading information. This isalso true with Time Rhythm Zone projections. The most reliable projections will result when the lesser degree projections overlap with the largerdegree projections. An overlap of the lesser degree projections to thelarger degree projections is signaling that the larger degree trend changeshould unfold within the period of the lesser degree time projection.
The chart above shows the minor degree swing file with the majordegree (bull / bear trend) swings. The minor swing file includes swings ofapproximately 2%. The lower indicator window is the TRZ projectionfrom the Aug. 2, 1994 high using the 5%/21CDs swing file shown earlier.The top indicator window is the TRZ of minor degree swings. Theminor degree TRZ overlaps the intermediate degree TRZ providing aneven more confident outlook that a low will be made in mis period. Whilethe overlap periods of the two degrees are almost the same, the extremeperiod of Che minor degree is much less than the extreme period of theintermediate degree as represented by the shorter "tails."
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The minor degree TRZ runs from Oct. 29 to Nov. 26. Most of thisentire period overlaps with the intermediate TRZ which is Oct. 26-Nov,28. Notice that the minor degree projection is more "tightly packed" asthere are fewer extreme ranges an compared to the far out "tails" ofthe intermediate degree projections.Time Rhythm Zones and Sample SizeTRZ projections will often be made with a relatively small sample size ofpast swings depending on the degree of change of the swing file, whetherjust bull or bear swings are used and the length of the historic period thatis included. It is far more important to be concerned with constructing arepresentative swing file and only including the historic periods that arerepresentative of current conditions than it is with having a minimumnumber of swings to work with.In the examples above, there have been as few as five swings used forthe 80% range. So be it. We must use the information at hand that isrepresentative white being aware of the limitations of a small sample size.Even if only a small number of swings are used, the TRZ still accuratelyrepresents the range of time that trend changes have been made in the pastfor the period of time and degree of change under consideration. That isexactly what we want to know.Time Rhythm Zones Are AdaptiveTime Rhythm Zones are adaptive to the market behavior, TRZ projectionsare a reflection of the actual swings for the historic period included in thestatistical analysis. As a market progresses and new swings are made andincluded in the swing file, the most recent TRZ projections will adjust oradapt by including the new swings with the calculations. If the recent timerhythm is changing, it will be reflected in the new projections. Newswings added to the statistical base will only change the range of a TRZprojection if a new swing is outside the old range.
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Time Rhythm Zone Summary1. Time Rhythm Zone projections provide a completely objective methodfor projecting high probability time zones from where a reversal of aminimum amount of price change should occur based on the actualhistoric precedents.2. The high probability Time Rhythm Zone is the overlap of two timerange projections. In the case of a projected low, the overlap of thelow-to-low (L-L) and high-to-low (H-L) projected time rangesprovide the Time Rhythm Zone with a high probability of a lowbased on past market swings. The overlap of the H-H and L-Hranges provide the TRZ for a potential high.3. The user has complete control over the historic period to use for theTRZ Studies. If the current major trend of the market is known (bull orbear), only swings from similar markets in the past should be includedin the TRZ projection calculations.4. The user has complete control over the percentage of swings from thehistorical period to include in the TRZ projection. Generally, theprojected time ranges eliminate the smallest and largest 10% of theperiods leaving an 80% range. An 80% range implies that 90% of priorreversals were not made prior to the beginning of the 80% range and90% were complete by the extreme of the 80% range. Unless otherwisenoted, a TRZ is an overlap of two 80% ranges.5. Time Rhythm Zones of two degrees will provide more reliable projections for the time of the termination of a trend if the smaller degreeprojection overlaps with the larger degree.6. If the TRZ is a relatively broad period of lime, it is still a valuable bit ofinformation as it provides the most likely minimum and maximumextreme from where the next trend reversal should be made. Other timeprojection methods will provide the period within the TRZ when theactual reversal is most likely,7. With statistical analysis, the greater the sample size the greater thereliability of the conclusions. Time Rhythm Zones often have 0relatively few number of occurrences of past swings of a similar natureand degree of change. They still remain valuable, as they accuratelyrepresent the actual outcome of prior similar swings and provide aframework of what to anticipate for the current outcome.
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TRZ For A Trend Swing HighThis TRZ projection from the Aug. 15, 1995 low used all bull marketswings from the Sept. 1981 low. The projection was a fairly broad, threemonth period. The Jan. 1996 top was made right within the TRZ zone forthe top.
The TRZ Detail table below shows the range of L-H and H-H swingsfrom bull markets since the Sept. 1981 bear market low. The TRZ overlapperiod is from Dec, 17,1995 through March 12.1996.
As bonds rallied and exceeded the July high, traders and investorswould be alert to not anticipate a top prior to mid-Dec. The final top ofJan. 4,1996 was made right within the projected TRZ for the top.
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TRZ For A Counter-Trend Top In A Bear MarketThe mark made a sharp rally off of the Sept. 15, 1995 low. Since the markwas making lower-lows and lower-highs, a bear market is assumed. ATRZ projection is made for a counter-trend high in a bear market. All bearmarket swings since the Dec, 1987 high are used. Since this is a relativelysmall number of swings, 100% of the swings are used to make the TimeRhythm Zone projection.
The TRZ Detail table below shows the range of all H-H and L-Hswings from bear markets since the Dec. 1987 bull market top. Thereare relatively few swings because the mark often makes relentless beartrends with less than 5% counter-trend rallies. This is demonstrated bythe fact that the H-H range is much more extensive than the L-H range.The table shows that 100% of the swings are used. The Oct. 23, 1995top was made just a few days into the TRZ for a top.
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Another TRZ projection for a top is made from the May 28,1996 low.The mark had not make a 5% rally since the Oct. 23, 1995 high. Onehundred percent of the swings from all bear markets since the Oct. 1987high were used. Note that the time range of the Low-to-High and High-toHigh swings do not overlap. This is a result of the prolonged, Oct-Maydecline without an intervening high made by at least a 5% counter-trendrally. The mark made a top on July 31 which was right within the Low-toHigh range of past bear market, counter-trend highs. However, the highwas later than any prior High-to-High period making a new H-H extremefor bear markets.Past Low-to-High swings in bear markets had lasted from 30 to93 days. The July 31 high was made right within this time zone fora top.
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Time Rhythm Zones Are Simple, Yet EffectiveTime Rhythm Zone projections are one of the simplest yet most usefulanalytical procedures a trader or investor will employ. A narrow-rangeTRZ will provide a very high probability time zone for a trend change, Awide-range TRZ will at least provide the minimum and maximum dateslikely for trend change which will alert the trader or investor if a market isnearing an extreme relative to past history.If there is no overlap of the two time ranges, the trader or investor isalerted to the fact that the market is operating outside the range of pastactivity and extra care should be taken to consider the position of themarket from other perspectives.The best use of Time Rhythm Zones is in conjunction with otherdynamic time factors that provide target dates for high probability trendchange. When a Dynamic Time Projection falls within a TRZ, the oddsincrease for a trend change.
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Combining Dynamic Time Projections and Time Rhythm Zones ForHigh Probability Time AnalysisThe highest probability lime projections for trend change will occur whenDynamic Time Projections fall within an 80% or greater Time RhythmZone. The TRZ provides the relatively broad zone that indicates theprobable minimum and maximum period where the trend change will takeplace while the Dynamic Time Projections (Projected Turning PointPeriods) provide the relatively narrow time zones of usually just 2-4trading days that target the specific dates for trend change.Every change-in-trend will not take place at a coincidence of a TimeRhythm Zone and Dynamic Time Projection, but most will. When there isa coincidence of Time Rhythm Zone and Dynamic Time Projection, thereis a very high probability for trend change.
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DM - Time projections from the Sept 15,1995 low.
The Time Rhythm Zone (TRZ) projection from the Sept. 15 low shownin the indicator window above is the same one used as an example in theprevious Time Rhythm Zone section. This TRZ used 100% of all rallies inbear markets since the Dec, 1987 high. The TRZ projected the two monthperiod of Oct. 18-Dec. 17 for a counter-trend top. While this is a verybroad period of time, it provides the minimum and maximum dates witha very high probability of completing a top.Dynamic Time Projections which include Time Cycle Ratios and TimeCounts indicated either Oct. 21-23 or Nov. 12-16 were the two periodswithin the TRZ with the highest probability of making a counter-trend top.The chart above shows only two TCRs which are the Time Retracements,The 62% and 100% Time Retracements fell on Oct. 21 and Nov. 12. Thefinal top was made Oct. 23. The following charts show some of the otherdynamic time factors that fell near the Oct. 23 high.
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The chart below shows just five of the TCRs that fell in Oct. and Nov.Oct 19: 100% H-H Cycle TCR (4/17/95H-7/19/95H projected forward),Oct 21: 62% Time Retracement TCR (Time retracernent of the 7/19H9/15L).Oct. 23: 62% Alternate Time Projection (ATP) TCR (5/18/95L-7/19/95Hprojected from the 9/15/95L)Nov. 12: 100% Time Retracement TCR (Time retracernent of the 7/19H9/15L).NOV. 16: 100% ATP (5/18/95L-7/19/95H projected from the 9/15/95L)
The mark had been making five wave declines and three wave (ABC)rallies implying the larger degree trend was bearish. The rally from theSept. 15 low appeared to continue that pattern,
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Oct 23,1995 Top Made At A Coincidence Of Projected Time and PriceA price resistance zone (71.74-72.52) was made by three price projections:71.74: 78,6% retracement of the 7/I9/95H - 9/15/95L.72.46: 162% retracement of wave b (not shown on the chart below).72.52: 62% Alternate Price Projection (App). Wave C = .618 Wave A,
The mark rallied into the projected price resistance zone (71.74-72.52)in the projected time resistance period (Oct. 21-23) and an ABC rally wascomplete. The mark continued to decline to new lows from the Oct. 23topOn Oct. 23, the mark made a gap signal day which is one of the mostreliable daily reversal signals. A gap signal day is made when a marketgaps open followed by a new high and a close below the opening. Thedaily range leaves a gap from the previous day. When a gap signal day ismade at a coincidence of projected time and price, trend reversal is justabout inevitable.
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DM - Projections from the May 28,19% low.The TRZ projection shown below is also from an earlier example in theTime Rhythm Zone section, It includes 100% of the Low-to-High swingsin bear markets for about the past 10 years. The relatively broad period ofJune 27-Aug. 29 had a very high probability of making a counter-trendtop based on the past history.The Dynamic Time Projections indicated that either July _15-18 or July26-28 should complete the counter-trend rally. The DTPs fell right withinthe TRZ period resulting in a very high probability a lop would be made inthis time period.
A double top was made on July 16 and July 31, The July 16 high wasslightly higher. The chart above shows three of the time factors behindthe Dynamic Time Projections;July 16: 144 Calendar Days from the Feb. 23 H.July 26: 62% Time Retracement (TCR) of the Feb. 23 high to May 28 L.July 27: 60 Calendar Days (CD) from the May 28 low. 30, 60 and 90 CDcounts are particularly significant in the currency markets.
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The charts on the following pages show other time and priceprojections that fell near ihc double top.More time factors at the July 16 / 31 double Up:July 14: 50% Time Retracement (TCR) of the Feh. 23 H to May 28 L.July 16: 34 Trading Days (TD) from the May 28 L.July 16:144 CD from the Feb. 23 H.
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The chart below focuses in on just the ABC rally from the May 28low.July 26: 100% Alternate Time Projection (ATP); 5/28H-6/18L projectedfrom the 7/5L. This projection fell three days prior to the July 31 high andcoincided with several of the longer term time factors shown earlier.Aug. 1: 162% Time Retracement of the B wave decline (6/187H-7/5L).
When short term time factors coincide with longer terra time factorsthe probabilities increase for a trend change.
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Price Projections At July TopPrice relracements and alternate price projections indicated two resistancezones where a counter-trend high was probable.67.34-67.69: This zone included retracements from two prior highs and analternate price projection67.34: 100% Alternate Price Projection (Wave C = Wave A).67.58: 62% Retracement (2/23H-5/28L)67.69: 38%Renacement (10/23H-5/28L)68.38-60.64: This zone included the all important 50% retracement of themajor range as well as a variety of other important price factors.68.38: 78.6% Recracement of the 2/23H-5/28L (not shown on chart).68.38: 262% Retracement of Wave B.65.53: 162% Alternate Price Projection (Wave C = 162% Wave A)68.64: 50% Retracement of the 10/23H-5/28L,
The extreme high of the rally was made July 16 at 68.40 right withinthe resistance zone of 68.38i-68.64. The mark reached this upper resistancelevel right within the Dynamic Time Projection for a top of July 16-18."When time and price coincide, change is inevitable,"
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Bonds: Nov. 11, 1994 LowBonds are one of the most consistently reliable markets that make nearlyevery significant trend reversal at direct hits of projected time and pricetargets. The Nov. 11, 1994 low was no exception. Time, price and patternall came together to signal a major trend change was unfolding in Nov.1994. The Time Rhythm Zone and Dynamic Time Projections shownbelow are made from the Aug. 2, 1994 high which is labeled as a wave 4.
The TRZ projection for a low was the period of Oct. 26-Nov. 23. TheDynamic Time Projections for a low fell on Oct. 3-5 and Nov. 11-14, Thesecond period, Nov. 11-14, fell within the TRZ projection for a low.The Nov. 11 Low fell directly on the coincidence of the DTP and TRZtime projections for a low. Wouldn't it be nice if every trend change felldirectly within the coincidence of each of these important time projectionmethods? Every trend change does not, but, many do. All successfultraders have the patience to wait for the high probability trade set-upsthat are made within the context of their analysis methodology andtrading plan.
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Alternate Time Projections Into Nov. LowThe chart below shows three different Alternate Time Projections thatwere targeted for Nov. 12 and 13. This was a Saturday and Sunday. TheDTP target dates were expanded to Nov. 11-14 to include Friday andMonday. The final low was made Nov. 11.Nov. 12: Wave 5=262% Wave 1 (10/15/93H-11/23/93L projected from8/2/94L)Nov. 13: Wave 5=100% Wave 3 (1/28/94H-5/11/94L projected from8/2/94H)Nov. 13: [(C:C (Cycle:Cycle) projection]: 1/28/94H-8/2/94H projectedfrom the 5/11/94L (Wave 3-4 = Wave 4-5).
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Price Projections At Nov. 11, 1994 LowThe Nov. 11 low was made at the price target of the three most frequentprojections for a wave 5 low. These three are:Wave 5 = 100% Wave 1Wave 5 = 62% or 38% Waves 1-3Wave 5 = 127% or 162% Wave 4
The 97.16-96.24 zone was targeted as the ideal price zone for a wave 5 low.97.16: Wave 5 = 100% Wave 197.10: Wave 5 = 38% Waves 1-396.24: Wave 5 = 162% Wave 4As bonds made new lows going into Nov., the minor cycles are used tofine tune the larger degree price projections. The sub-divisions of wave 5are shown on the chart on the following page.
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