Cyclical Analysis To Calculate Intermediate Term Targets?
There are three circumstances that cause traders to close a position. A stock violates a stop loss level, trades through a predetermined target or the traders stomach cant take it anymore. Using stops to close a position has its advantages. In the event you find yourself on the right side of a run away train, you will realize most of the move. The problem is that most stocks typically trade in a 10% to 30% range and using stops result in small average gains. Better results can be achieved by determining targets and exiting when they are achieved. There are several ways to determine realistic targets with the most reliable method being a form of a cyclical analysis. When using cyclical analysis to determine intermediate term price projections, focus on Cycle B which has an average time duration of 20 weeks. In theory, a stock’s price would go up for 10 weeks and then decline for 10 weeks completing the 20-week cycle. Construct a half cycle which is simply a 10-week simple moving average
