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Chart Controls & Usage
In the cycleAnalyzer, cycleProjector and cycleProjectorXT indicators, there are 3 buttons and a menu icon that are available for making quick adjustments:
Using cycleAnalyzer
w Experiment with the number of cycles displayed. The default is 3 but in some situations you may gain a better picture by displaying 4 or 5.
w Look for a cycle (or cycles) that track well with recent price action and have a fitness value of 0.20 or greater.
w Cycles will sometimes change significantly from bar-to-bar and this can be disconcerting. The best approach is to try re-anchoring the study at different locations between 0 and 20 bars back from the current price. If you find an anchor point that results in at least one reasonably well-correlated cycle (that also tracks well with price action between the anchor point and the current price) then stick with this projection and use it until its accuracy degrades. Don't be afraid to try different anchor points as you can always go back to a previous anchor that was working well for you.
w Use the projected cycles to determine approximate times for cycle highs or lows. Use these in conjunction with other support/resistance tools (e.g., floor trader pivots, trend lines, etc.) or oscillators.
w cycleAnalyzer is ideally suited to short-term traders and daytraders. It provides critical price action information without being too distracting. In addition, overall CPU consumption is very reasonable which can be important to fast-paced traders with many active charts.
Using cycleProjector/cycleProjectorXT
w Experiment with the standard and XT version to determine which one best meets your requirements.
w Use the Fitness (Fit:) and Pivot Point (PP:) legends to get an idea for how well the back-plot matches the historical data. Look for a fitness value above 0.40 and a Pivot Point score above 50%. A strong Pivot Point score (e.g., 80% or above) is generally acceptable in lieu of a strong fitness value.
w A good cycleAnalyzer anchor point is usually the best anchor for the cycleProjector indicator as well. Follow the instructions for anchoring the cycleAnalyzer above. When you find a good point, move the cycleProjector indicator to this location.
w When utilizing the projection in your trading, focus more on the near-term projected turning points and less on the amplitude or overall shape of the projection.
w Use the projections in conjunction with your other technical analysis tools to isolate specific turning points (or cycle tops or bottoms) of interest. Remember, these are not predictions. Rather, the projections are showing you how the security you are charting is likely to behave if the forces moving the security now continue into the future.
w Anchoring the indicator a few bars back from the current bar is a good way to determine if the projection has validity. The closer the projection matches up with the first 5 to 20 bars of data, the better.
Copyright © 2004 Divergence Software, Inc.