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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
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