The market cycle

The underlying factor in this forecasting is a series of repeated cycles on the basis of which we form our hypotheses. The same method is applied to market analysis. We can use market cycle theory to forecast the evolution of financial markets, i.e. we can predict when the low and high of a cycle will occur. Using this information, we can thereby outline our trading strategy.

What is market cycle?
Let us first understand the basic concept of a market cycle. Imagine a price moving up and down depicted on a chart in the form of a wave. The bottom of the wave is the low point and the top of the wave is the high point. Each low point is connected to a high point, i.e. crest of the wave. The time between two low points or two high points can be regarded as a cycle. Imagine this like the longest day of summer and the next longest day of sumer next year in a cycle of seasons. Frequently repeating cycles over a period of time are used to define a trend and trends are used as the basis for forecasting and therefore investment.