RHYTHM CYCLES and TARGETS.

Technical analysis has evolved because traders want to be able to define the price structure of the market and then make a ‘model of expectation’ about any future price move. Methodologies have evolved so that a ‘model of expectation’ about any future price move could be pre-determined with high accuracy. The methodologies that exist in the market have the same characteristics; cycles, waves and extended movements of past data to provide the necessary framework to profit in the market place. Elliot looked at the market structure and developed an understanding that the price action moved in an action-reaction framework, all up moves are followed by corrective moves and all corrective moves are followed by up moves. Within this continued ebb and flow certain patterns could be found that repeated itself and Elliot developed the wave theory consisting of five waves; three impulse waves followed by two corrective waves. The Elliot-wave framework has been used by many traders to define the market structure and is probably only one of a few that has been universally accepted in the market and technical analysis fraternity.


Cycles in the market have been defined by seasonal patterns or unique rhythms of each stock or derivative, these cycles exist in all timeframes and are built on the ‘observered phenomenon’ that events have a tendency to repeat themselves at more or less at regular intervals. Traders who use any cycle theory will normally look at the distance between the highs and lows and the span between the two and then make a calculated judgement that they will be in a better position to anticipate the next high or low. The best-known structural analyst and cycle trader is probably Gann and his belief that mathematical patterns of precise movements governed the markets.


AMT provides the information for finding the Cycles and Rhythms of each stock and derivative traded so that the odds once again shift in the favour of the trader. It allows all traders the ability to define Market Risk as they trade the trend that has been clearly defined within each higher timeframe.