PTG Cycle Day 1 Review 040920

Cycle Day 1 review of a futures trading spreadsheet: how to read average decline, violation and penetration ranges, and project possible highs/lows from historical cycle data.

Key Takeaways

Cycle Day 1 analysis uses historical average declines and violation/penetration ranges to set reference targets.
Spreadsheet line items (possible low, possible high, average range) are calculated from prior cycle highs and lows.
Use 24-hour or RTH values consistently, depending on the chosen starting point.
Projected levels are guides for reading price action, not forecasts; traders should respond to what the market does.

What the video covers

Host opens with mandatory compliance disclaimers: hypothetical results have inherent limitations, trading risks money, content is educational only.
Presenter notes technical issues with Zoom screen sharing, forcing the spreadsheet and charts to be shown separately.
Cycle Day 1 is described as the day a probe typically finds a secure low after the prior cycle completes.
Based on roughly 20 cycles (about 60 trading sessions), the average decline on Cycle Day 1 is about 109-112 points, used to set a possible low target from the prior cycle day 3 high.
Violation decline: when price breaks below the prior cycle low, the average violation decline (about 25 points) gives a projected low target.
Penetration range: when price breaks above the prior high, the average penetration range (about 29 points) gives a projected high target.
Presenter explains using 24-hour Globex session values versus regular trading hours (RTH) values, both calculated the same way but with different starting points.
Projected levels are framed as historical observations of ranges under specific conditions, not predictions of where price will go.
Discussion covers inflection points, the idea that a broken level becomes a new reference, and reading market action instead of forecasting direction.
Breakout discussion addresses volume requirements and bull or bear traps when price breaks levels without sufficient participation.

Chapters

What is the average decline used to project a Cycle Day 1 low?

The presenter uses roughly 20 cycles (about 60 trading sessions) of historical data to find the average decline, around 109-112 points depending on session. Subtracting this from the prior cycle day 3 high gives the possible low target.

How is the violation decline different from the average decline?

The violation decline applies only when price breaks below the prior cycle low. It is calculated from the observed declines in those violation cases, giving a target of about 25 points below that low in this example.

Should 24-hour or RTH values be used for these calculations?

The presenter says both are valid and the calculations are the same, but the starting point differs. He tends to lean toward the 24-hour session because it is more complete, though there is no strict preference.

Full Transcript — Download SRT & Markdown

Speaker A

please change all right so good afternoon everyone thought we would do another cycle day review today will be a cycle day one review today's Thursday April 9th before we get to the presentation industry regulations require that at least we highlight

Speaker A

compliance and if they rule 2 - 2 9 and you've seen this before just simply hypothetical results have inherent limitations trade money you can afford to lose this presentation in summary is for educational purposes only and past performance is not indicative of future

Speaker A

results alright so what I thought it okay I'll go second I lost the screen share one sec oh I see what happened whiteboard Oh interesting okay it doesn't show screen alright okay now I get it it's not going to be able to share I'm not

Speaker A

going to be able to share both screens at the same time that's disappointing that's most disappointing okay all right so let's do this I thought I would be able to share chart in the spreadsheet but apparently the zoom was

Speaker A

not allowing me to do that so we'll do one step at a time then I wanted to be able to share them both at the same time but doesn't doesn't allow me to do that used to do that

Speaker A

not playing ball okay so everybody should be seeing the spreadsheet and if you could just verify that for me that would be great okay we're in good shape then all right I'll just do it separately I what I was wanted to do is

Speaker A

have the chart side by side with the spreadsheet but we can do it this way we'll just call an audible okay so what I want to show today is first off a couple items on the spreadsheet and I've

Speaker A

gotten a number of questions recently about how to read the spreadsheet how to find the various numbers and so forth so I thought we would do a short review on this yes it is being recorded and so today is a cycle day one and so on a

Speaker A

cycle day one the normal would be for a probe to find a secure low that's the job of a cycle day one coming off the completion of the prior cycle so is to find a secure low so some items that we

Speaker A

want to be looking for is and asking questions of will be what is the average decline that has occurred on cycle day 1 over X number of cycles so in this case we're going to be looking at 20 cycles

Speaker A

so 23 day cycles which is approximately 20 60 trading sessions so what is the average decline on a cycle day 3 that has occurred in the past so that's the kind of the starting point for a cycle do 1 because we want to know what the

Speaker A

average is so we can again determine whether or not the price action that is unfolding is an agreement with that is it you know it hasn't succeeded in achieving that average is that less than average is that more than that average

Speaker A

etc so on the spreadsheet here what we want to look at is line eight where it says possible low for cycle day one and you'll see here that will it'll give us a couple numbers 26:42 down to 26 44 today based upon the

Speaker A

average decline okay so again over the past 60 cycles or 20 average cycles with 60 days what has been observed is that the market has moved if we move over here to the right during the Globex 24-hour sessions a

Speaker A

total of 109 spot 86 points that's the average decline for the the entire 24-hour session if you were to take the rth session regular trading hours individually that value is 112 so between 109 and 112 they're both correct so to kind of think of it as a

Speaker A

range all right so a zone so that's where we got our starting point and then as the morning unfolds how do we we can determine whether or not the market is unfolding normally or not now how do we

Speaker A

get these numbers now there's the range so how do we get these targets over here to the left so this is measured from the prior highs so the prior high here in column P so if you take 27 52 50 less a

Speaker A

hundred 986 because that's the average decline now gives you over here on the far left 26:42 64 okay so the average decline target is based from the prior cycle day 3 in this case hi very straightforward now again you may not have understood

Speaker A

where those numbers come from that's where they come from okay so that's our starting point now we know that if the market opened week below the prior day's low so again two two big reference points according to Taylor were the

Speaker A

highs and lows of the session and the question becomes was price able to exceed those levels and by how much when it when that happens and we'll get to that in a moment but so for the average decline that's just how we get it so

Speaker A

let's take a look at the possible low for the day what that means is if price on cycle day one declined below the prior cycle day threes low what the question is then what is the average decline look like not the average

Speaker A

decline from the from the prior high but what we call the violation decline so when we're breaking down through a level it's referred to as a violation when we're breaking up through a level when price is breaking up through a level

Speaker A

it's referred to as a penetration okay that's the terminology that Taylor used so in this case if price so means just clear the drawing off here so if price violates the prior low so what's the low up here twenty six twenty spots seventy

Speaker A

five what is the average decline violation decline that is that that has occurred in the past so again coming over here and column you all right we're looking at this area here where it says 77 54 so we take the

Speaker A

26:20 spot 75 less 77 spot 54 gives us over here to the left in inline 9f 925 4321 okay so you take the low because we're violating below a violation of the low subtract the average violation gives us the result of 25 4341 so that is the

Speaker A

average violation on a cycle day 1 when price violated the cycle day 3 prior days low make sense so far so that's how you get that particular number let's clear the screen up one more time go the opposite side so let's talk about the

Speaker A

penetration so on a cycle day 1 once again kind of walk through that same process if on a cycle day one price penetrates up through the prior high so let's locate the prior high once again 2750 250 what is the average penetration

Speaker A

range that has been observed in the past so again we're going to come over here in column you and we're gonna see that that value is 29 21 so add that to the high and that gives you in column F over

Speaker A

here to the left 27 81 71 alright so the high plus the average penetration range gives us the target and what we call possible high do you always take the 24-hour low it's the no you don't have to take the

Speaker A

24-hour low if you're if you want to calculate the 24-hour values so there's two sets of values here all right there's two sets of value and they're both correct by the way so if you decide you want to ask what the penetration

Speaker A

high is based upon the 24-hour numbers it would take the full session 24-hour numbers if you're if you want to say well what is it what it has it been for the rth session only and so you take the

Speaker A

rth highs and lows respectively so in this case today or yesterday rather the high was the same because the high occurred last the low is different from the rth to the Globex or twenty four hour session low so that's different so

Speaker A

it's the starting point that you want to measure one is not better than the other necessarily it's just a different value but the calculations are the same so try not to get confused you know in in one sense I think of them as okay so this

Speaker A

was the potential in in the overall session how is the rth session doing relative to that remember it these levels do not it this concept does not imply that those levels are going to get fulfilled this is not a prediction game

Speaker A

rather this is that if the market moves in this direction and triggers a penetration move to the upside or a violation move to the downside what we're trying to determine is historically how far has it gone and again this is what this spreadsheet is

Speaker A

the designed to show us actual observations of ranges that have occurred under those specific day conditions when a violation occurs or a penetration occurs on a specific cycle day what has been the the average extension or range away from the

Speaker A

highs lows okay so it's important but again once and they're both correct it's just what your starting point is I don't necessarily have a hard preference though I tend to lean into the 24-hour session only because it's more

Speaker A

comprehensive but I will say that what you really want to do is use both of them as a zone so again when you take a look at this for a moment right take a look at the penetration high over here

Speaker A

all right so it says possible - cycle day 1:27 81-71 in the 24-hour session and 2792 in the rth session think of that as a zone potential prices can move up to the 80 171 s up to the 90 twos all

Speaker A

right so I always kind of think of these as a zone I kind of lay them out so on the violation side prices can decline on an average violation between 25 60 988 down to 25 4321 that's how you that's

Speaker A

how I view it that's how I've learned to view it working with this over the years it's a zone and as our members know I've always talked about it it's never one level it's always a zone so when you

Speaker A

have a zone in mind that's the zone potential potential is the key not predicted zone but potential now today is a little bit different in that the the decline that has occurred throughout the session it will go to the

Speaker A

chart in a moment the decline that occurred throughout the session I did not even come close to the average decline when that occurs when this kind of scenario occurs on a cycle day one a decline did occur so one of the ways you

Speaker A

want to view a cycle day one is we're expecting a decline some magnitude decline the average decline measures X and we'll get that from the spreadsheet we are expecting some sort of a decline now if you recall the prior cycle there

Speaker A

was no decline right out of the gate Sunday evening the markets moved higher and that was a cycle day one today now is a cycle a new cycle day one a little different we did get a decline it was

Speaker A

let much less than average and the market has proceeded the move beyond the prior highs so the bullish condition remains in effect everybody's good with this so far so today was less than average bullish formation and then actually price went up and penetrated

Speaker A

above the prior highs now the again and the initial targets here 27 81 71 up to the 92 s that was the initial target the way I look at this these the the average initial targets now over here on the far right I

Speaker A

want to bring in a concept called standard deviation and what this basically right so we're looking at going to be looking at columns X and column y so again 24-hour session and hour th session so what do these represent these represent the

Speaker A

distances or the standard deviation distances that have been observed once again all actual observations when the projected possible hi in this case 2781 to the 92s we're exceeded so think of this as a new level and then the

Speaker A

question is when on those days that these levels have been exceeded how far have they been exceeded by its it's the same basis question is if it's penetrating up through the prior high these would be the projected targets but

Speaker A

on occasion when those targets are even exceeded beyond that well what has been the observed distances or ranges above that initially that initial targeted level so over here in columns x and y all right you'll see the values in this

Speaker A

case 2027 17:81 so what this means is you take the twenty-seven 81-71 target over here on the left which was the initial projected penetration target if that gets exceeded what would then be the next projected level so you'd now

Speaker A

you would just simply take the twenty-seven 81-71 again you can round these fractions off if you want to add the standard deviation in the 24 hour session which is 20 spot 27 and that gives you a result of 28 0 198 so call it 2802

Speaker A

everybody follow so far so this is how you would on days now this is not always going to occur every day naturally but on those days that it does and you would do the same thing 2792 plus 1781 or

Speaker A

round it to 18 okay and those are the values you'll get and what we call the standard deviation or I just like to refer to them as the extreme observe the levels okay so the odds of a decline in

Speaker A

the top right I don't use these a whole lot be honest with you but essentially what it means is in the normal days prior to all the highest volatility that we're currently experiencing we're experiencing a hundred and eight point

Speaker A

ranges so these values up here where it says odds of a decline greater than 10 handles and then greater than 20 handles don't really apply at this stage when the VIX was in the teens prices were you know to get a 20 handle range day was

Speaker A

pretty awesome you get 20 handles in about 20 seconds today with the high volatility that we're having so the odds of a decline it's the kind of if you were to think if you were to kind of think back and take a step back a few

Speaker A

months and say we're the VIX is in the teens so the odds of a decline greater than 10 handle was relatively high at 73% the odds of the decline greater than 20 handles right was about 50/50 okay so again that was back in the day

Speaker A

when the VIX was you know very low so in in so these don't really matter a whole lot at this stage so I again I don't even look at this because it's it's irrelevant at the moment now all right

Speaker A

the average range on a cycle day one would you please go over that as well so the average range is just simply that the average range simply means that the range of the day the high-low range okay so let's take let's take a look at let's

Speaker A

take a look at the high-low range here all right twenty seven fifty two fifty minus twenty six twenty might spot seventy-five so what's that 131 point seven five correct 131 so call it 132 I like to round numbers off so 132 point

Speaker A

range up to and including today or yeah well it's not including today by the way because today is well one step back here I'm actually measuring the high and low from cycle day three but what you would do is you take the high low for the past

Speaker A

20 cycles on a cycle day one is what you you're getting here is your average range 107 so 108 points I like to round so that's how you would do it you would take the high-low range alright so

Speaker A

today's high-low ranges okay so today's high-low range range today will be added on to the current values for cycle day 1 and then this number just continues to change alright can those average ranges be smoothed exponentially you can

Speaker A

these are simple averages over a 20 period these are just a simple 20 period average and that's all what we're measuring can you apply exponential and beef them up a bit you can I don't think it's necessary not in a case such as

Speaker A

what we're trying to track a simple moving average of 20 cycles is has been adequate for us I don't think that beefing it up using an exponential and smoothing it and doing all the other things but it's something you can do I

Speaker A

mean you would need lists in order to do that certainly you would need to have the data streams you know the raw data in order to do that or you can create your own for that matter you know you

Speaker A

can you can create your own spreadsheet and many actually have you know they like to you know do things somewhat on their own and kind of customize items these sheets are not customizable but I've seen people you know if you wanted

Speaker A

to take a 20 cycle average of a cycle day one so you would have to go back and see what the ranges were every cycle day one and apply a smooth exponential moving average to them and see what that

Speaker A

value is my suspicion is it won't be too far away at least significant excuse me significant enough where it's gonna make any real difference so in that case you know but yeah you could do that if you'd like so what I wanted to show here and

Speaker A

again kind of the the core of this all right so here's a question so now that we are at twenty eight eleven as we speak is this telling you that we essentially have another ten points to the upside at twenty eight twenty one on

Speaker A

the day session okay so on the day session what do we go so let's take the numbers let's do that so the session hi projected right was twenty nine twenty seven ninety two correct and we'll just call it eighteen points plus eighteen

Speaker A

all right so now we're going to come all over here and we're gonna add call it eighteen points and that brings us to twenty eight ten all right so now that we're at twenty eight eleven so we're right we're right at this upper

Speaker A

statistical edge okay is that where we currently are we're like at 2808 or something right so we're very close to the upper statistical so that two statistical edges was the twenty seven 81-71 right plus in the twenty four-hour

Speaker A

session so that gave us about twenty eight oh two so between twenty eight oh two and twenty eight ten basically is our upper edge of the statistical range that has been observed on a cycle day one when price has penetrated up through

Speaker A

the cycle day three high now you may want to review this video a number of times okay it's different than the statistical extreme zone that we have laid out it's a different calculation so the stat X that we have in our normal

Speaker A

indicator package is is base differently that you can think of it as a statistical extreme in that regard but it's not the same calculation as is the x zones that we actually have that you've seen so it's a totally different

Speaker A

calculation but this is the extremes statistical extremes or standard deviation extremes that have occurred on a cycle day one when price has exceeded or penetrated the cycle day three high so today is a bullish day now remember the goal here number one is to establish

Speaker A

a low so it established a low early around 2700 if I'm if I recall this morning then that so the question was early somebody had asked well is this a secure low and we don't technically know that until the end of the day but we can

Speaker A

clearly make an assumption so part of trading is making inferences and assumptions as to what is unfolding based upon the observations of what we've what we're seeing if you're waiting for a confirmation each and every time that the cycle day one low is

Speaker A

in place we may miss some opportunity you know throughout the course of the session so the idea this morning was to the answer to that question is we don't know that for a fact yet but we could probably make some pretty good

Speaker A

inferences that that's probably going to be a secure low we didn't know that and we still don't know that because the market you know may take a nosedive you know at any point we don't know but that said we have to make some judgmental you

Speaker A

know decisions and inferences about the action and so this morning yeah 20700 look pretty pretty firm from the by response that occurred and that's essentially that's all what we we need to know and I also mentioned this morning throughout the session is

Speaker A

in regarding the cycles such as today don't overthink it that if the cycle hi was made first or low I you know over here where it says you know the cycle day three high and the three low is made

Speaker A

first or last I I don't really pay a whole lot of it I don't put a lot of weight on that how how prices close is more important to me as to whether it was made first or last so I don't really

Speaker A

place a lot of emphasis on it I'm not sure how much emphasis Taylor himself placed on those you know that observation but I don't place a whole lot on it again just my personal preference as I've used this throughout

Speaker A

the years but rather I want to say you know definitely if the price pushes through the highs or lows well I want to know what what the potential is because if there's pretty good range potential in the market as its unfolding in

Speaker A

live-action is is showing us other internal strength in the markets then at least I know what the potential is based upon this method it's not an estimated Fibonacci or Maury math or things like that which are have their place but

Speaker A

based upon this to me these are in fact observations that have occurred and that's why I believe this is a superior way of viewing the markets comparatively to those other methods those other methods are estimates alright and these

Speaker A

are observations that actually have occurred right there based upon actual averages not estimates and that's the difference and I would rather base my decisions on actual LOB's of a that the market knows and has done has created okay on the chart can you please

Speaker A

show how it's more important for you how important for you how the price close rather than the numbers well the numbers the I do you mean rather than whether it's current first or last it's all about momentum when it comes down to

Speaker A

that so if everybody's good with that let's take a look at this visually alright so we wanted to dig in to see how the spreadsheet how you actually get the numbers and we're using just the SP as the example here but if you were to

Speaker A

do it with NQ or ym or Russell it's the exact same formula exact same levels you read it the exact same way alright so no one know them all how to do it very very straightforward okay so this is how you

Speaker A

would do it and again particularly for a penetration level or a violation level regardless of what day you're on one two or three it's the exact same way to calculate it so the values over here to the right will be what they are for that

Speaker A

particular day and you're still going to take the measurement from the high the low you're gonna subtract it you're gonna you know add it you'll get those levels and numbers okay so let's take a look at the chart

Speaker A

I wish we were able to do this kind of split the window side-by-side but apparently zoom didn't like to do that so we'll have to work around that so let me put up one second let me put up the

Speaker A

chart and let's see what we can we can look at from from the chart itself okay so we've switched over to the charts so you should see one chart here 60 minute chart cycle day 1 and so come

Speaker A

with the some of the items that we want to identify here so number one let's identify the cycle day so let's just let me just mark these here okay so this is CD 1 what we get to the left

Speaker A

this is CD 2 and this is a 24-hour session by the way this is a CD 3 and then now we're back on write CD 1 so this gives us a good look of the of the cycle there's nothing like testing your

Speaker A

code in production environment I know alright so so we're talking about the CD 1 here today so a couple items again we've already gone over this on this spreadsheet but visually I just want to be able to show you you know how it

Speaker A

looks with the indicator the indicator just makes it a lot easier to see once you know what the spreadsheet offers and and how the numbers are derived you don't really have to stare at the spreadsheet all the time alright you can

Speaker A

using the indicator you can get these values and it's right there on your chart so it makes life so much easier but so number one you got the cycle day 3 high here alright I'd say they actually that blue line right there ok

Speaker A

so the cycle day 3 high so if we would a measure ok if we were to measure from the cycle day 3 high down to what the average decline measurement was remember was between the 42 s and 40s right so

Speaker A

that measurement here if the market declined on the cycle day 1 - the average decline there it is right there so we just have it laid out on one of them 4250 basically so that white line indicates visually how far price would

Speaker A

need to go what the average decline would be on that day well today cycle day one actually we already know that price did not so that so price did decline actually it price went up a little bit penetrated above

Speaker A

the prior high got rejected at the initial penetration level and was rejected and price pulled pushed down I guess there was non-farm payroll numbers this morning right so but if you look left and this is important now this has

Speaker A

nothing to do really with a cycle but rather knowing where inflection points we've been talking about this the past few days as well knowing where inflection points are where prices change direction is a flexion point inflection point so if you take a look

Speaker A

here on cycle day to where where was there an inflection point there it is right there x marks the spot prices were holding highs they drop down they recovered and then they finally broke and that's when we saw that

Speaker A

aggressive move into the close the other day coming into cycle day three and again goes to Alan's questions earlier about what was your question earlier about the you want to repeat that question I can remember exactly what it

Speaker A

was well I'll women I'll find it here on the chart can you please show how it's more important for you how the price close rather than the numbers yeah so here's the thing so how the price closes is

Speaker A

important so if you take a look at cycle day two the other day prices closed very weak near the low of the session typically the normal expectation then becomes on the next day if prices have closed very weak in this case low in their

Speaker A

range the expectation would be for a continuation to some degree and to that degree would be to one of the violation levels that would have been calculated on that day so it's important to you know you can make an assumption that

Speaker A

prices may forego further in this case in this example we're talking on cycle day 2 to 2 into cycle day 3 that prices may go lower but there's also the chance that it won't and so we again our observational skills

Speaker A

you know instead of just saying it's going lower we don't want to say that we want to be we want to remain flexible we want to say it may go lower and if it goes lower I have some levels that I you

Speaker A

know again those violation levels based upon the spreadsheet what's the average decline a violation decline or the average penetration so this is where you want to instead of making guesses or in Phatak statements that it's going to do

Speaker A

this or it's going to do that markets going to do what it wants to do regardless of what we say but by using this as a guide by saying okay prices closed week into the Nia to the lows in

Speaker A

this example here on the prior cycle day 2 we can make an inference that prices may go lower on cycle day 3 or into cycle day 3 into because cycle day 3 is a long day but the initial move and that

Speaker A

could be in the asian session could go lower but what happens if it doesn't so remember I'm always writing two scenarios I'm writing a bullish scenario and a bearish scenario every day in the daily trade strategy and you want to

Speaker A

think tomorrow you want to think about the market in those terms bullish and bearish scenarios that will give you flexibility to say if it goes lower these would be the targets if it goes higher these set of targets would be you know considered

Speaker A

which direction will it go I don't have a clue but it doesn't matter because my job is to be able to read the markets action to what it's doing rather than what I think it should be doing and

Speaker A

again if you adopt that type of mindset you're gonna be so much better you'll be able to stay flexible so looking at cycle day 2 into cycle day 3 yes it could have gone lower but observational II what happened prices actually bounced

Speaker A

on cycle day three came back down and this was all during the Asian euro session it held lows here and then as we entered into the US rth session here prices moved up higher and then once they took

Speaker A

out that reaction high over here on that was in the overnight so at the time that was the overnight high not that not the cycle day too high the overnight high on cycle day three once that happened here

Speaker A

right you saw some volatility between these two 60-minute candles and then once it was able to clear that level clearing and converting it it was it was off to the races for the rest of the day all right into the high of cycle day

Speaker A

three okay so looking good so considering so considering you know the idea of the importance of whether the market continues on or not you we have to you know we have to observe whether or not you know a violation or a penetration

Speaker A

has taken place you know in and out in other words expanding that range okay so clearing converting so at what point did that happen so the idea of a clearing converting is you take a pivot hi in this case over here all right

Speaker A

we're I'm circling that was known and I don't necessarily like to use the word resistance but that was the last point from which the buyers paid that high price that was the last buyer at that point before the market pulled pulled

Speaker A

down okay and then found again support or where the last seller sold at that moment and then buyers stepped in again so as buyers stepped in again came back up to that high prior known hi there was some backing in fourth there I think

Speaker A

yesterday I called a Rock'em Sock'em robots or something throughout the day or throughout that period so these I remember these are 60-minute bars so there's a lot of action between the two once the price clears above it and

Speaker A

closes above it or is is able to stay above it so think about one of the examples I quickly use is in football right so point after touchdown you can either kick it or you go after the two-point conversion so think of it

Speaker A

that way in order to convert what what what does the ball need to do it has to get over that line and has to stay there in essence so think about a two-point conversion so in terms of trading the

Speaker A

conversion is it has to clear that line that prior known resistance level all right and it has to stay there okay so but Michaels so thinking about in terms of just what it needs to do all right it

Speaker A

needs to get past that prior resistance point and stay above it that becomes a conversion when that occurs then everybody trading everybody waiting the trade everybody looking to get in on it will start coming in because they're seeing that the market that had

Speaker A

resistance at a level there's no more resistance this is why I use the term the phrase buyers are higher and a lot of people don't understand that oh when I supposed to buy low and sell high but in fact buyers are waiting to buy once

Speaker A

they have seen that that there's no more sellers once they can can confirm that you know for themselves that there's there aren't any more sellers or at least sell is strong enough to push it back down then they want to buy them

Speaker A

because then there's there's open air to the upside that's when it's actually there's actually less risk inherently to buy them when the sellers are complete because the expectation is bought more buyers are going to come in and it's

Speaker A

gonna push prices higher quicker that's why a lot of people like buying breakouts but that's a different topic from what we're discussing now but once prices have converted above a level or below a level all right then the markets

Speaker A

can move more freely Michael says I see a lot of instances where that happens and they'll allow the repeated closes above that level and then it gets smacked down again there's a battle think about it it's a battle line in

Speaker A

many cases it's a battle line you got those that you know want to keep it below a level and you got those that want to move it above a level and there's your back that's why I call them Rock'em Sock'em

Speaker A

robots because the the inherent comment there is that it's an important level that needs to you know get cleared out but once they are able to clear it out then the markets move you know a lot you know a lot more than normal

Speaker A

ok Alan says can't be more agreeing with that so I'm assuming you are agreeing with that but how do you distinguish this good breakout and really being so high and get a bull trap and being the last buyer so I'm not sure exactly what

Speaker A

you're asking but how do you distinguish that it's a good breakout volume ok volume is fuel if you are if if price is breaking again this is a whole different topic but we'll talk about it here for a

Speaker A

second all right if if price is breaking above a level and there's not one does not fuel it so volume is fuel if there's not vote if there's not volume in that direction or if the market internals the advanced

Speaker A

decline line for instance is not supportive of that move then it could be a bull trap very simply all right what happens is people try to anticipate the breakout and this is where the the people that do that can get trapped now

Speaker A

remember it you've got two forces that you know at work here at a breakout point at a key breakout point so those that want to keep it down those that want to move it higher well who's the who's the stronger again who's the

Speaker A

stronger party well those that have the most fuel though that can produce the most volume and clear out the volume so in order for a break out to happen to the upside the buyers have to you know have to whatever

Speaker A

the available supply is at that time they have to absorb that and extinguish it so volume you gotta track the volume very closely during breakout during those key and points because if prices is just probing above a high and there's

Speaker A

not really a lot of associated volume with it then it's you know and you're just in you're anticipating that happening and you buy it and you haven't really seen the support of evidence for it you could get caught on the long side

Speaker A

and then it's a bull trap and then they push it right back down and then you know you stopped out for for a loss alright so a lot of people like to wait for that volume to accelerate because if

Speaker A

there's a if there's expanding volume to the upside well it's certainly that means there are sellers there but if the if the bids are bidding in to the offerings that are for sale and the volume is expanding to the upside what

Speaker A

does that suggest to you it's it's it's it should suggest you that the buyers are aggressive and they want to buy those contracts and they're willing to pay that price for those contract alright so again there's some you know

Speaker A

there's some anecdotal evidence that that that needs to happen all right so michael says sizeable volume at a point like that in his experience is usually going to reverse the trend well if it's a breakout okay we get you remember the volume has to be

Speaker A

whatever's for sale has to be cleaned out if there's a lot of volume into a low and prices stall all right so there's think about it this is there's aggressive buyers all right so like at this you know level we're talking about

Speaker A

this aggressive buyers and the volume is expanding to to the upside right so people have out there they're buying the offering they're paying the offering and there's sellers they're selling it but the price doesn't move a whole lot and

Speaker A

the volume explodes well again we still got a battle ground there right we got new lungs new buyers that just bought long you've got sellers that have that are selling their Long's but if that doesn't move that that doesn't move that

Speaker A

the sellers are more pow you know in greater quantity and the buyers are not able to clear out that volume sure enough you're gonna have trapped Long's so yes in one sense volume is required to for a breakout but the nature of that

Speaker A

volume you go to watch that still closely because just because there's increasing volume doesn't guarantee the breakout but it is a component of a breakout all right so again the idea of being flexible when it comes to these

Speaker A

points in time all right isn't is important again I don't want to get too far off the topic but my point here was you know the price has cleared through that level of conversion of that level and once the market was satisfied that

Speaker A

that level had no more supply buyers come in all right and continue to move you know yeah that could be a discussion for tomorrow as well so you'd be sure to have your questions by the way for tomorrow anyways coming

Speaker A

into let's move on move ahead we just got a few more minutes here I want to finish this up so today again cycle day one we found at the 2700 s as I mentioned and then prices penetrated back up through the

Speaker A

cycle day 3 high during the are th regular trading hours session and it did move up to the average penetration level right in here all right 27 81 71 which we saw in the spreadsheet now the next level all right which was the

Speaker A

standard deviation level which is basically the 80/20 802 s roughly and that's the top of this red zone here that you see and you can see that the prices did stop there right for a period of time so that

Speaker A

validates that level now you can see right now and this last candle as we're speaking we're right into that next the rth which is not shown here the rth standard deviation level or extreme level which is was it when we measured

Speaker A

it 228 tens so we're at 2808 so basically where we're at the next kind of key point at this point there is no other based upon the cycle of observations there is no other level above this so the market is pretty much

Speaker A

on its own if it's going to continue on higher it's pretty much on its own to do its thing but it is a bullish cycle day one and we want to treat it as such the just because it's at the extreme level

Speaker A

does not mean it has to reverse but we want to be sure it is an important prices I have an important juncture for the bigger picture I believe we're into this 50% retracement zone from peak to trough on a daily basis so again there's

Speaker A

gonna be a lot of you know activity going on here over the next probably well we're into the holiday at the end of the today the long weekend but again we're at inflection point even though we're at this inflection point you want to

Speaker A

maintain the bias as long as the structure holds don't just say okay the markets gonna reverse him we're gonna go back down you know five or ten percent it may but we'll deal with that on another day as of today right now we got

Speaker A

a cycle day one in bullish momentum we our price is that extremes or again observed extremes for the 20-period cycle and that's all that we know so it's before you start making any you know predictions about where things will

Speaker A

what things will happen next observe what is happening observe that prices have reached projected range targets based upon cycle observations and that's where we stand and that's going to conclude this review of the cycle day one it's a little bit

Speaker A

different cycle day one we didn't get the full decline we got a relatively shallow decline which found support at a prior known level and then prices then proceeded to clear the prior cycle day three high penetrate and then this

Speaker A

example here which is the market is a great great example it actually pushed up into the extreme observations so this is still a normal cycle day one from the standpoint of we did get a decline all right and then the rally began so this

Speaker A

low here near the the twenty seven hundreds is going to be excuse me more likely the secure low for you know the day I mean that's it's almost a foregone conclusion at this time of the day alright and we did not have a sell day

Speaker A

on cycle day three or sell short day you mean so short day yeah so cycle day three is normally you know you sell it and then the the you know the the idea is to take some profit they may have done that

Speaker A

somewhat and I alluded to that on cycle day too because remember this this prior cycle even went well beyond the norm so that cycle day two may have been a day where they sold Long's perhaps initiated shorts into this drop into the clothes

Speaker A

no fur the selling came no further selling came in in into you know follow through and then cycle day three actually perhaps was a day where it was and again I'm kind of just looking back at this and kind of back filling a

Speaker A

little bit but cycle day three could have been the strength on cycle day three could have been some short covering against cycle days twos you know potential layout of some shorts it you know again we're trying to make some

Speaker A

sense and some inferences here you know I don't know for a fact all I can say is you know that the market continues to be in a bullish pattern how that you know how people out there whether they're

Speaker A

shorting or going along or covering shorts and whatever they're doing mixing their positions doesn't really matter a whole lot to me all right I mean I can make an inference and that's fine but even if you make an inference make sure

Speaker A

you're flexible enough to change that inference okay could you define a secure load Doug asked basically a secure low is once that low is in place so today on the cycle day one if it's tested and it made and it doesn't have to be tested

Speaker A

but typically lows and highs tend to get tested but a secure low is is a low where if tested does break all right so if tested does not break and that is so for instance this low over here to the left alright these

Speaker A

these pivot lows what happened to these pivot lows here on cycle day three that I'm pointing to prices came down too though that level call at 2727 ten it was tested over here so these pivot lows so that reinforces 2727 10 zone as

Speaker A

support so we can then make an inference here today based upon that evidence today that today's cycle day one low is secure we don't know for a fact until the end of the day and we're again we're mid-afternoon here but with pretty good

Speaker A

confidence that that even earlier this morning that that more likely is a secure low based upon that it actually tested a prior pivot level and then held here being that it's on a cycle day one low or cycle day one creating the low we

Speaker A

can make a you know a pretty good assumption that it's secure but the technical aspect of security or surety is for some sort of a retest but it doesn't have to retest but in most cases the normal kind of sequences is to

Speaker A

retest the high or retest the low and the reason for that is they want to find out whether there's buyer's or seller's below that level and that's the idea of a retest and that's the idea of determining whether or not a level is

Speaker A

secure or not once they feel as though you know they get the sense that in their confident up that it is secure then they take definitive action and that's the idea of deciding whether or not a low or a high

Speaker A

is secure because they need to take definitive action all right guys I'm gonna end the formal presentation here we've gone about an hour and five minutes we'll have this rendered recorded and uploaded to not only the website will

Speaker A

will give you will have it ready for everybody tomorrow and again tomorrow Friday Good Friday we are holding a Q&A session so be sure to come with questions whether you want if you'd like to write them out first and send them

Speaker A

off to us via email you can do that or be prepared and if you have Auto audio capability and you'd like to ask a question verbally we can do that as well and we'll do it in the zoom room as

Speaker A

we're doing the like today it'll be 10:00 p.m. Eastern Time correct okay and you know we'll we'll just keep it flexible it will go no further than noontime so we'll give two hours if we need it and it's all gonna be dependent

Speaker A

upon you know the level of questions and so forth we get so if you have questions if you have you know troubles in an area it and you can email me questions if you like ahead of time that would be great

Speaker A

because I can prepare kind of a you know an initial response to some of the questions if you have and again you can ask about the method you can ask about you know the the educational program you can ask about anything related to the

Speaker A

markets right and you know I'll do my best to give you the best response as possible all right let me shut this down and we will continue on in a moment and if anybody would like to reach out

Speaker A

to me and have any questions you can reach me at David at Polaris trading group comm and visit us at WWE this review of cycle day 1

Topics:cycle day 1futures tradingTaylor cycle analysisviolation declinepenetration rangesecure lowGlobex sessionspreadsheet analysismarket structuretrading education

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