Cycle Theory is based on the following principles:
- Summation – Price movement is the sum of all active cycles
- Harmonicity – Neighboring (cycle) waves are related by the number 2 (i.e. double or half)
- Synchronicity – Cycle waves of different lengths have the tendency to bottom at the same time
- Proportionality – Cycles with longer time spans (periods) should have proportionally higher amplitudes
- Variation – states that the previous principles are just tendencies as opposed to hard rules
- Nominality – A set of harmonically related cycles affect all markets
