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Cycle Trends
Professional

An original program using Cycles and Technical Analysis

to analyze and forecast Financial Markets.

This professional version supports ©MetaStock data

and real-time ©eSignal data (Intraday and End-Of-Day).

Developed by Dr. Carl Heymann and Alwyn Openshaw

with support and advice from Dr. Issy Bacher.

A Product of Cycle Trends Software C.C.

Copyright © 2004,2005 All Rights Reserved.

©Cycle Trends Software C.C.

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Welcome to Cycle Trends Professional, an original program developed by Dr. Carl

Heymann and Alwyn Openshaw with support and advice by Dr. Issy Bacher.

The program uses cycles and technical analysis to analyze and forecast financial
markets.

It is an invaluable aid to profitable investment. Cycle Trends works equally well with all
the different components of the financial markets, including US and international
equities and indices, commodities, precious metals, gilts, currencies, funds and futures.

It works equally well with end-of-day, intraday and tick data and recognizes the
differences automatically.

Introduction to Cycles

The Magic of Cycles

Investors and market watchers have long been fascinated by the idea that shares
move in cycles with a regular amplitude and length. Nobody has ever been able to
satisfactorily explain why shares, indexes, commodities, currencies and derivatives
should move in cycles, but there can be no doubt that they do – the empirical evidence
is overwhelming.

Just as we can predict the future in natural events such as seasons and human activity
(hormonal cycles), so too it can be shown that business and stock market cycles also
exist.

Obviously, if we accept that shares are cyclical, then it becomes important to try and
understand how these cycles work, and where a particular share (or any other data
stream) is within its cycle. If you can do that, then you are in a good position to predict
where it will move next with a better than even chance of being right. Cycle Trends
has shown that time cycles are the major determining factor in bull and bear markets.

The Old School

Over the years there have been many methods developed for analyzing cycles in
shares – such as The Elliot Wave, W.D. Gann, Delta, Granville’s Market Clock and
many others. All of these theories have one thing in common. They all seek to impose
a more-or-less rigid cyclical structure onto the dynamic and ever-changing share
market.

This means that they will appear to “work” some of the time when the market moves
within their particular framework. But equally they all “fail” regularly. These “failures”
are explained with an ever more complex matrix of named exceptions and deviations,
but this is of little comfort to the investor who has bought in on the strength of their
predictions.

The Cycle Trends Approach

The Cycle Trends program differs from these traditional wave and cycle theories,
because it does not begin with a pre-existing framework into which the data must be
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squeezed, but rather it begins with the raw data and searches for whatever cycles are
actually there. Once a cycle has been found, Cycle Trends attempts to establish its
‘strength’ or reliability as a predictive tool.

Using some of the techniques of digital signal processing and advanced statistics such
as Fourier transforms, trigonometric regression, and array analysis, the inventor of
Cycle Trends, Dr. Carl Heymann, developed a program that would dynamically search
for the cycles within any continuous data stream such as a stock price, index or
currency. The mathematics is scary, but the result is pure magic.

CHAPTERS

1. Installation and Access

2. Default Display
3. File Menu
4. Chart Menu
5. Layout Menu
6. Indicators menu
7. Tools Menu
8. Utilities Menu
9. Help Menu
10. The Toolbar
11. The Horizontal Arrow Keys
12. The Back-Test Feature
13. Persistence of Indicators
14. The Cycle Input Screen.
15. Interpretation of Cycles.
16. Trendic
17. TrueOBOS
18. Candle Sticks and Micro Patterns
19. Disclaimer

1. INSTALLATION and ACCESS

Please ensure that all applications are closed before installation.

CD Installation
Insert the CD into your CD-ROM drive. The setup program should launch
automatically. If not, open My Computer and double-click on the CD-ROM drive
(normally D: or E:), or open Windows Explorer and click on the CD-ROM drive, and
then double-click on setup.exe. Alternatively, click Start, click Run, and type [CDROM
drive]:\setup.exe.

Web Installation
Open My Computer or Windows Explorer and double-click on the downloaded setup
file e.g. ctpro220.exe.

Follow the installation instructions to complete the installation of Cycle Trends

Professional.
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In order to use eSignal data with Cycle Trends Professional, the eSignal Desktop
Application must also be installed.

Access
To launch Cycle Trends Professional click Start, click Programs, go to Cycle Trends
and click on Cycle Trends Professional.

Alternatively, double-click on the Cycle Trends Professional icon (red graph on a

yellow background) on your Desktop.

The Select Data window will appear.

Select either “eSignal Data” or “MetaStock Data” from the Data Source dropdown list.

Select either “IntraDay” or “End-Of-Day” from the Periodicity dropdown list.

MetaStock Data
Any existing IntraDay, Tick, or End-Of-Day MetaStock data can be opened by Cycle
Trends. Please contact your MetaStock data vendor if you are unsure of the path to
your data.

Use the Drive dropdown list to select the relevant drive, and use the Data Folder list
box to select the relevant folder containing your MetaStock data. If the selected folder
contains MetaStock data of the selected periodicity, a list of the instruments available
in that folder will appear in the Existing Data list box.

The Existing Data list box lists instruments sorted by Name and displays the Symbol
and Interval for each instrument.

IntraDay and Tick instruments will be listed when an IntraDay periodicity is selected.
Daily instruments will be listed when an End-Of-Day periodicity is selected.

To search for a particular instrument in the list, click in the Search box and start
entering the name of the required instrument. As text is entered the list of instruments
will adjust to only display the instruments whose names start with the text entered.

To open a particular instrument, either double-click on the instrument, or select the

instrument and click the Open button.

eSignal Data
Either existing or new IntraDay or End-Of-Day eSignal data can be opened by Cycle
Trends.

In order to open new eSignal data, or to update exisiting eSignal data, you must have
an active eSignal subscription and the eSignal Desktop Application must be installed
on your computer.

A list of existing instruments of the selected periodicity, if any, will appear in the
Existing Data list box.
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The Existing Data list box lists instruments sorted by Name and displays the Symbol
and Interval for each instrument.

IntraDay instruments will be listed when an IntraDay periodicity is selected. Daily

instruments will be listed when an End-Of-Day periodicity is selected.

To search for a particular instrument in the list, click in the Search box and start
entering the name of the required instrument. As text is entered the list of instruments
will adjust to only display the instruments whose names start with the text entered.

To open a particular instrument, either double-click on the instrument, or select the

instrument and click the Open button.

To open a New instrument, select New Symbol and enter the eSignal symbol for the
new instrument. Then enter a name for the new instrument in the adjacent Name box.

If an existing instrument is selected before selecting New Symbol, the Symbol and
Name of the existing instrument will be automatically entered into the New Symbol
and Name boxes.

If the selected periodicity is IntraDay select an interval from the Interval dropdown list.

Then click the Open button to open the new instrument.

2. Default Display

How the Graphic Display is constructed.

Once a valid instrument name is accepted the program jumps to the GRAPHIC
DISPLAY SCREEN , four horizontal boxes will appear on the display as the default.

Top Box
The graph in the top box is the is a line of closing prices over a smooth cyan coloured
line. This is the Fourier Smooth, around which the cycles are calculated.
Then follows a graphic display of the volumes traded, if available.
At the bottom is the date scale. The boxes cannot be horizontally stretched or
compressed in an arbitrary way and the date scale remains accurate.
Close is just the default. The user can rapidly change to three other screens and back
with different time scales with the tool bar, these are:- High-low, Weekly high-low and
Candle sticks. If the data base has insufficient information the daily graph defaults to
daily close.

Second Box
A line graph of the Cycles-Trig indicator containing all identified cycles is displayed as
a yellow line with a forecast into the future zone. The caption at the left-hand bottom
reads “trigs all CC = xx %” where CC% is the correlation coefficient of the fit of the
cycles to the data.
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Third Box
A line graph of the Cycles-Array (all cycles) is displayed as a smoothed cyan line, with
a forecast into the future zone. The yellow line is the unsmoothed array data. The
caption reads “array all CC =xx%” where CC% is the correlation coefficient of the fit.

(See Interpretation of Cycles for explanation of Trigonometric and Array Cycles)

Fourth Box
A line graph of the Trendic 55 Graph appears as a yellow line. The caption “Trendic 55”
appears in the left-hand bottom corner. (See further on for explanation and Trendic
techniques).

Above is just the default. Except for the top box, the price box, which always contains
price, volume and date, the user can have any indicator on any box.
Use the yellow icon with an “I” in each box to reach the Indicator Menu and choose
any indicator on any box.

3. File Menu

• New Instrument
• New Linked eSignal Symbol
• Exit
• Printer. Will always print the screen, color on white to save ink.
• Start Again. Must be used to de-activate the Go Back feature (see later). Also
clears added lines such as moving averages from the screen.

4. Chart Menu

The menu alters the time scale of the graphs. The mouse pointer cannot drag
the time scales; instead they always remain rigid and therefore accurate.
• Hilo
• Close
• Candle sticks (must have open prices in the data base)
• Weekly Hilo (calculated by the program)

5. Layout Menu

The menu alters the vertical layout of the graphs.

• 0 Indicators - Only the price graph is displayed
• 1 Indicator - The price graph and one indicator graph is displayed
• 3 Indicators - The price graph and three indicator graphs are displayed (the
default)

6. Indicators Menu

If this menu is assessed from the Toolbar bar it will always display the indicator in
the second box. If it is assessed from the yellow icon with an “I” in any box it will
display in that box.
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The first four indicators viz. Cycles-Trig, Cycles-Array, Trendic and TrueOBOS are
all cyclical and propriety indicators and are discussed later on. In contrast to
“standard” indicators such as the Stochastic, their history is non-persistent and thus
irrelevant. This is because the Fourier Smooth, from which all four are derived,
behaves similarly to a least squares regression. Every new data point will alter the
historic “best fit” graph of the regression. Only the last data point together with the
future projection is relevant for interpretation. This is why visual comparison cannot
be used for historic evaluation of the performance of these four indicators. The Go-
Back facility has to be used.

• Cycles-Trig (short for Trigonometric). Clicking on this indicator will open the
CYCLE INPUT Screen. This is a spreadsheet with information on all the
significant cycles. There are on average from 10 to 20 significant cycles. Each
line displays the number, Period (days, weeks or minutes), Amplitude, Fit%
and Bartels value for an individual cycle. Clicking on the heading of a column
will sort that column.
The user is free to choose any combination of cycles by individual clicking or
dragging vertically for contiguous areas. The chosen cycles will appear in the
top left box.
Much easier would be to use the recommended cycle combinations. The right
hand topside of the Cycle Input screen has various cycle combinations that can
be used. The numbers of these cycles will show on the top left box. The
recommended combinations are:
All: All significant cycles
Bartels All: All Bartels cycles
Bartels Trade: Bartels value larger than 60% and a period shorter than 100
days
Bartels Trend: As above but a period larger than 100 days.

Bartels was an American who used mathematical statistics to develop a way of

choosing the most significant cycles amongst a group. The Bartels test tests a
cycle for both amplitude and phase stability and is today considered to be the
best test for cycles.

• Cycles Array. As above, but the cycles are calculated in a different way.

• Trendic. Using harmonic cycles to calculate turning points.The default is 55

• TrueOBOS. An improvement on standard overbought/oversold indicators.

• Relative Price. This is the ratio between two prices. The program switches to the
Select Data screen from which the user can choose any instrument. The ratio
between the price of the instrument in the price screen and the input instrument
is displayed. The time scale of the two securities must be identical i.e. end-of-
day cannot be compared with say 30 minutes intraday.

• Compare Share. As above but the price graph of the input instrument is
displayed. The indicator can only display on Screen1.

• Volatility. This is a measure of the up- and down movement of an instrument. It

is often used to improve the timing of transactions involving options such as
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warrants. The volatility used by the program is the same as in the famous Black
and Scholes formula.
The user enters a period. The default is 90.
The use of volatility can improve the profitability of option transactions as
follows:
If the cycle indicators (discussed later) on the underlying security spots a trough
then buy calls and sell puts if the volatility is relatively low.
If the cycle indicators (discussed later) on the underlying security spots a peak
then buy puts and sell calls if the volatility is relatively high.

• Stochastic. It utilizes the proximity of the closing price to the high price of an
instrument. That value is averaged over a period and smoothed. The closer the
close is to the high, the higher the indicator and the closer the close to the low,
the lower the indicator. It could vary from 0% to 100%.
The user enters a period. The default is 11.
Trading signals are generated at the 20% and 80% levels.
The indicator should only be used on active shares.

• R-s-i. Relative Strength Indicator. It is but one in a range of indicators called

Oscillators or Momentum Indicators. Some names are: “Overbought-Oversold”,
“Momentum”, etc. They all use a combination of differencing and/or averaging,
and/or smoothing on a range of past data. They cannot recognize nor reproduce
past patterns in the data and their cross-correlations are very high meaning that
they all give the same answer.
The R-s-I was chosen as representative of the whole range because it has pre-
defined limits, between 0% and !00%. It uses a formula that averages and
compares the close of “up” periods with “down” periods.
The user enters a period. The default is 22.
Trading signals are generated as follows:
Overbought when the R-s-i is above 70% and Oversold when below 30%.
Divergence: If the R-s-i moves up and the price moves down over a number of
periods, consider long entry or short exit and vice-versa for selling.
Trend Breaks: Draw a trend line through 3 or more local peaks or troughs on the
graph then act on a trend break.

• OBV-Oscillator. On Balance Volume was made popular by Joseph Granville in

1970’s. His original concept was sound and is still valid but interpretation, based
on trend lines only, was difficult. Here the indicator is used as an oscillator and
interpreted the same way as the R-s-i. The indicator is very important because it
is the only one not based on price alone.

• Macd. Macd stands for “Moving Average Convergence Divergence”. It is the

difference between two exponential moving averages (e.m.a), a small (default
12 periods ) and a large (default 26 periods). The signal line is an e.m.a of the
Macd line (default 9 periods).
The periods may be altered in the input box by three comma separated values
in the above order.
Trade signals are generated as follows:
■ Divergence: If the Macd line moves up and the price moves down over
a number of periods, consider long entry or short exit and vice-versa.
■ Draw a Trend line through 3 or more peaks or troughs on the Macd line
then act on a trend break.
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■ Consider long entry or short exit when the Signal line crosses the Macd
upwards and vice versa if crossing downwards.
■ Consider long entry or short exit when the Macd line crosses the Zero
line upwards and vice versa for downwards.

7. Tools Menu

• Trendline. Draws a trend line with a mouse click and drag on a box.
• Vertline. Draws a vertical line with a mouse click through all boxes.
• Zoom. Zooms an area in a box. Click and hold anywhere on a box, drag lower
and right wards, release. The zoom will appear on a separate screen. Click on
the zoomed screen to return.
• Invert Color. Inverts the colors on the screen to background white on a separate
screen. This screen is inactive. Click anywhere on this screen to return.
• Moving Average. Puts a moving average on the price screen. The default is 20.
Each new moving average will appear in a different color.
Only simple moving averages are used because there is no compelling
evidence that exponential moving averages, or any other type, perform better.
Single moving averages are interpreted by a price break-through. If the previous
price is below and the present price is above then consider long entry and short
exit and vice versa.
Moving averages are also used in pairs, one with a small period (5 to 15) and
one with a large period (50 to 2000).
The moving average performs well in trending markets and badly in non-
trending markets. Unfortunately these different markets can only distinguished
by hindsight.
• Temporary New Price. The tool is intended to test the influence of an intra-day
price or the influence of a foreign market where the prices are too late for the
close of your database. The values the user enters are transient, do not alter the
hard disc database and will vanish if the user goes to another instrument or
clears the screen.
On the input box the user can enter one price (normally close) or:
Enter 4 values separated by commas in order of close, high, low, and volume.

8. Utilities menu

• Notes. If Notepad.exe is present in your version of Windows, you can utilize it to

write and retain any notes.
• ScanScreen. May only be done on end-of-day MetaStock data. While the
GRAPHICS Screen is displayed, click the Utilities Menu then ScanScreen.
Scanning will start immediately on the open folder i.e. on the instruments last
listed on the Existng data box.
Scanning is done using the TrueOBOS indicator with the Mean Absolute
Percentage Error (MAPD) larger than one (OB) or smaller than minus one (OS).
Every instrument on the scanned list will have (OB) or (OS) attached. OB means
that the instrument is possibly overbought and OS that it is possibly oversold.
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Please do not interpret these as mechanized trading signals, but rather as a

motivation to examine that instrument more closely.
If the user has all the ©MetaStock end-of-day instruments in one directory, the
scan may take an hour or longer. Users are strongly urged to make only use of data
vendors who split all contained instruments by some means such as alphabetically
or by sector or by some other classification.

9. Help menu

Also press the key F1 to reach the help menu. The menu is like a web page and
you can jump forwards and backwards by hyperlinks (underlined words).

10. The Toolbar

Float the mouse pointer over an icon in the toolbar to expose its function.
Some icons are especially handy:
2) Start Again: - must always be used after the Go-Back feature (explained
further on). It also clears the boxes from clutter.
4 to 10): - allows quick switching between time scales and screens.
15): - quick moving averages.

11. The Left- and Right Arrow keys

The four Arrow keys are always active when a graph is displayed. Press the left
arrow key and an info box will appear. The box will display: Date, Close, High,
Low, Open, Volume and Time if available from the data base. On end-of-day
displays Time is always 0000.
Continue to press the left arrow key to move one period backwards in time. The
right arrow key moves the red line forward in time. Use ctrl + arrow keys to
accelerate forward and back movements.

12. The Go-Back Feature

This feature is made available solely to test the past performance of the
indicators based upon the Fourier smooth(the cyan line on the Price Graph).
These indicators are: Cycles-Trig, Cycles-Array, Trendic and TrueOBOS. In
contrast to “standard” indicators like the Macd, they cannot be tested by visual
comparison because their history is non-persistent and thus irrelevant. This is
because the Fourier smooth is approximately a least squares regression
implying that every new data point will alter the historic “best fit” graph i.e. the
Fourier smooth.
The left and right arrow keys are always active. The left arrow key is used to
move the red line to some chosen date or time in the past and then the Enter
key is pressed. All displayed boxes will align to that date. Once at a back date,
the user can use the right arrow key to move forward one period at a time and
all the boxes will align to that date. In this way the past performance of the four
indicators may be observed.
The user can quit this time consuming process by restoring to the present at any
time past. Use the Start Again icon on the Toolbar or the File menu then Start
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Again or Ctrl+S. Restoration must be done even if the red line reaches future
time else the date will not be reset to the present time.

13. Persistence of Indicators

This is the ability of the program to hold the same indicators and their options on
the same boxes irrespective of changing to another instrument or to another
time period or from screen to screen. For example if the user have Trigs-all,
Array-all, and Trendic 55 on the screen, it will remain intact with all operations
unless the user changes them. The feature enables the user to quickly do the
same analysis on many shares by changing only the share name.

15. The Cycle Input Screen

Trigonometric- and Array cycles are two different types of cycles. A combination
of Trigonometric cycles is smooth by nature, but a combination of array cycles
has to be smoothed.
Clicking on Cycles-Trig or Cycles-Array displays the CYCLES INPUT Screen
with 4 predefined cycle combinations to choose from.

ALL
Refers to a combination of all the cycles detected by the program. It gives the
user an overall forecast of peaks, troughs and trends of the financial instrument
under scrutiny. Some analysts rely purely on “All” cycles for their conclusions.
Click “ALL”, then “ENTER” and the cycle graph will appear in the box you are
working on.

Bartels All
Refers to the combination of cycles where all the cycles in the combination
have a Bartels percentage above 60%. Theoretically this should be more
accurate that the “ALL” cycles. Click “Bartels All”, then “ENTER” and the Bartels
cycles will appear in the box.

Bartels Trend
This gives the Bartels cycles with periods above 100 and Bartels percentages
above 60%. The combination indicates the possible trend.

Bartels Trade
This gives the Bartels cycles with periods below 100 and Bartels percentages
above 60%. The combination indicates a shorter-term projection more suitable
for trading.

Other options
Besides the predefined combinations of cycles available, the user may choose,
use and experiment with any combination as previously explained. The user
may find, for example, that a certain single cycle has a very good track record
such as a 52 week annual cycle in agricultural commodities.
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The displayed grid has the following columns:

Column 1 is the number of the cycle. There are on average 10 to 20 cycles.

Column 2 is the Period of the cycles in minutes, days or weeks. The period of a
single cycle is regular and measured from peak to peak.
Column 3 is the Amplitude or the cycle strength. Amplitude is the vertical
distance from the minimum to the maximum of a single cycle. The amplitude is
generally proportional to its period. The longer the period the larger the
amplitude.
Column 4 is the Fit (%) Percentage as measured by the Correlation Coefficient
which is a statistical measure of the historic fit of the cycle to the smoothed
data. Cycles can also be manually selected according to their fit(%). (See later
in cycle combinations.)
Column 5 is the Bartels value. The value provides a direct measure of the
likelihood that a given cycle is genuine. The closer the cycle statistic is to 100%,
the less likelihood it is that the cycle has been influenced by random events. In
general cycles with a Bartels value below 55% should not be used.

16. Interpretation of Cycles

Cycles are always interpreted in the same way. Low risk entering or exiting of a
position should be considered when the cycle is near or at a trough (long entry
or short exit) or a peak (long exit or short entry). Actual entry or exit should be
done by using one or more triggers. These are the TrueOBOS and Trendic (see
later) . Standard indicators such as the OBV-Oscillator and Macd may also be
used as confirmation triggers.

Trigonometric regression (trigs) and array analysis (array) are two different
ways of fitting cycles to data. In trigs, cycles of a specific shape are fitted to the
data. The shape is always sinusoidal i.e. sine and cosine curves which move
through regular peaks and troughs in a smooth manner.
In array, the shape of the cycle is dictated by the data itself and could be
anything such as combinations of triangular cycles, square cycles or any other
irregular repeating shape. Combinations of array cycles are mostly very irregular
and have to be smoothed. The program uses a Fourier smooth for this purpose.

In general the two methods should broadly confirm each other. When they do
not a visual comparison of the cycle to data in the immediate past history should
give a clue to which of the two methods will be more accurate in the forecast.
Also a cycle combination with a larger Correlation Coefficient will perform better
than one with a significantly lower (say 5 percentage points or less) coefficient.

To the right of the cycle graphs is an area named FUTURE of approximately 60

periods. This area gives an indication when troughs or peaks could occur in the
future often giving the user ample time to consider action.
In deciding whether the Cycle Combination is correct, the cycles used in the
combination should fit the price movement in the immediate past. If an
instrument has been moving up and the cycles are pointing down, the two are
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obviously not synchronized. Other cycle combinations should then be

examined, including the weekly cycles. It is possible that the financial
instrument is not amenable to cycle forecasts at all. Use the vertical line facility
to go back to a previous trough or peak and then use the trendline facility to see
of both the price graph and the cycle combination have moved in the same
direction since the previous peak or trough. Once a combination is forecasting
correctly, it should continue to perform well.
The Weekly cycles are used in investment decisions because they convey the
longer-term picture. However, they are of special significance when they reach
peaks and lows at the same time as the daily cycles

17. Trendic

This is a propriety indicator and is derived from the instantaneous slope of a number of
harmonic (Fourier) cycles.

Trendic Method
Click on Trendic to initiate calculations for the displayed security. An input box with a
flashing cursor will appear. Input the number of cycles you require. Click OK or press
Enter and a graph will appear. You can input from 2 to 225 cycles. However, the
graph may get cluttered up beyond 100 cycles.
A clearer picture is also obtained when, instead of the line graph, the Hilo graph is
used and first put into the top window, before examining the Trendic cycles.
The scale of the Trendic graph is in units of circular degrees and can vary from -75° to
75°. The white line in the center is zero degrees.
If the Trendic indicator crosses the Zero line upwards, a bottom is indicated and
crossing downwards a top is indicated.

Functions of Trendic
Trendic has three functions.
1. Overbought/Oversold indicator
2. Trigger for action during cycle bottoms and tops.
3. Test if a long term trend is broken.

Overbought/Oversold Indicator
Trendic is a very useful overbought, oversold indicator. Overbought is indicated when
the Trendic line reaches the 60° to 75° zone. Oversold when the Trendic line reaches
the –60° to –75° zone.

Action Trigger
Once the peak or trough of a Trig- or Array cycle is imminent or passed, the Trendic
indicator is very valuable as a trigger for action. Long entry or short exit is triggered if
the Trendic crosses the zero degree line upwards. The opposite is triggered if the zero
line is crossed downwards.

Long term Trend

A long term Trendic, say 3 or 4 cycles, may be used as a test of whether the ruling long
term trend is still in-tact. As long as this Trendic is above the zero line the long term
trend is still intact or vice versa. This could be more effective than using long term
moving averages for this purpose.
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Which cycles should be used in the Trendic indicator?

The program defaults Trendic to 55 cycles. There is a mathematical relationship
between the Trendic value and the period of the smallest harmonic cycle included in
Trendic if the data is longer than 900 periods i.e.:
Period of the smallest cycle = 1024 / Trendic value.
For a Trendic of 55 the smallest harmonic is 18.62 periods. If Trendic crosses the zero
degree line i.e. a turning point, some small harmonic cycles, down to 18.62 periods,
are turning. Therefore if Trendic is increased, smaller and smaller periods are included,
sensitivity increases and turning points become more abundant.

18. TrueOBOS (Overbought/Oversold)

The purpose of this indicator is to signal an instrument has reached an overbought or

an oversold condition.
Instead of plotting the bands around the price graph, as in ©Bollinger-bands, data is
first “flattened” by the Fourier smooth making overbought and oversold levels
horizontal and thus clearer to the user. Furthermore, use of the Mean Absolute
Percentage Deviation and not the standard deviation, makes the technique free from
the shackles of the Normal (Gaussian) distribution.
Click on ‘I’ to get the indicator menu and then on TrueOBOS or type O. This puts
TrueOBOS in the clicked box.
One can also press Ctrl+O in which case OBOS will appear in box 2.

Interpretation of TrueOBOS
TrueOBOS plots the deviations around the Fourier smooth on the Price Graph in a
statistically sensible way. The symmetrical thin red and green lines are one MAPD
(Mean Absolute Percentage Deviation) away from the zero line and the thicker lines
are two MAPD’s away. If the indicator is below the green lines long entry or short exit
can be considered and the opposite above the red lines.
The indicator performs well with stable price series’, such as Indices and well traded
instruments. It should not be used with instruments trading low volumes.
Cycle lows and peaks are significant if confirmed by the TrueOBOS.

19. Candlesticks

Candlesticks utilizes the patterns generated by open and close prices and high and low
prices. Because of the names of the patterns, such as Doji , Hanging Man and
Shooting Star they have acquired a mystique of their own. For users interested in the
interpretation of these exotic patterns, several books exist and the screen may readily
be used for manual interpretation.

Aside the exotics candlesticks may be utilized in other ways. Because the candlestick
screen zooms in to about 100 periods of data, micro patterns are more readily visible.
The micro patterns may include support, resistance and trends and may also be used
as triggers.
The price action for a specific day is easily interpreted. If the candlestick for a day is
filled the open price is higher than the close. This means that the price has declined
during that day and vice versa for an unfilled candlestick.
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20. Disclaimer

The originators of the Cycle Trends program, Dr. Carl Heymann and Dr. Issy Bacher,
cannot be held responsible for any investment decision that is made from the use of
the technical indicators included in the Cycle Trends program.
They can also not be held responsible for errors in the financial data that is supplied by
third party vendors.