Letters To S&C | MAY 2008
Letters To S&C by Technical Analysis, Inc.
Letters To S&C by Technical Analysis, Inc. FINDING THE DOMINANT CYCLE Editor, I found John Ehlers’ article in the March 2008 S&C, “Measuring Cycle Periods,” a very interesting way to adjust my indicators. But I have a question: How do I find out what the dominant cycle is, and how do I calculate it? I am asking because this is the key thing to start with. KLEMEN VATOVEC, Slovenia John Ehlers replies: The default setting to display the dominant cycle is FALSE, as shown in the third line of code on page 18 of the March 2008 issue. When run in TradeStation, this input is easily changed to TRUE so the dominant cycle is plotted as an overlay on the spectrum. When using the dominant cycle to adjust other indicators, I suggest using half of the dominant cycle period for oscillators such as the RSI or stochastics, where a peak-to-valley swing is desired. On the other hand, one should use the full dominant cycle period for determining the true slope of a trend by taking a momentum over the full period, or for indicators such as the CCI to determine a trading channel.
by Technical Analysis, Inc.
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