Fractal Forecasting by Ian Copsey

140 j i NTEGRATING I N DICATORS AND CYCLES

TIME CYCLES

As a final discussion on indicators I will demonstrate a tool that can help with
market timing and structure. However, this is a very deep subject and one that
cannot be covered in full within this book but will hopefully provide an indication
of the additional information they provide. I should also add that these are long­
term cycles which do not yield the same results within shorter time frames, so I
mostly use weekly and monthly charts.

I have to add that the cycles I use are fixed and are restricted to a limited
number of Foreign Exchange pairs. I shall therefore focus on the set of major
currency pairs that display the ability to remain consistent: The Dollar Index,
USDJPY, GBPUSD and AUDUSD. The history for EURUSD is far too short and
although I do see EURUSD with longer history before July 1 st 1 999 it is derived
from trade movement rather than real historical trading. In addition, prior to the
Euro being introduced, the European currencies were quoted directly against the
Dollar (amount of currency units to the Dollar). Following the introduction of the
Euro however, it became an indirect currency pair (that is it is quoted as an
amount of Dollars to one Euro.) In this respect, because cycles are measured from
low to low, the change from being quoted directly to the Dollar to indirectly has
turned the chart upside down.

I do have quite a few clients who use Delta Cycles. I have been meaning to
study these but have never had enough time to fully immerse myself into this
subj ect because Harmonic Elliott Wave keeps me so busy. From the limited
information I have gleaned, it is relatively straightforward but does have its
moments that lack clarity with inverted cycles and this is where my subscribers
like to match expectations through the Harmonic Elliott Wave outlook. I do
recommend the Delta Cycles but unfortunately cannot provide a sufficiently
informed description of them.

The basic concept behind fixed cycles is that natural events occur in
recognizable cycles, e.g. the period taken by planets to circle the sun, the Earth's
revolution around the Sun which produces the four seasons, the revolution of the
moon around the Earth which affects the tidal patterns of the oceans, etc. Intense
research has been made into cycles by Edward R. Dewy, Stan Erlich and Walter
Bressert, who have noted such cycles as the 9.6-year cycle in salmon abundance,
a 22-year cycle in international battles, an 1 1 -year cycle in sunspot activity and
even the 60-year cycle of economic depression. We readily accept many of these
cycles in our daily lives: re-occurring business cycles, industrial expansion and
recession. It should come as no surprise that these are seen in market behavior
al s o .