Peak Analysis Using Hurst Logic


#1

Hello Experts,

I would like to learn if this is possible to do Peak Analysis by using Hurst Cycles. In sentinent trader we do have a feature. Would like to learn pross and cons of doing that because I understand David Hickson has been emphasizing on Trough Analysis mostly. Moreover, my job demands me to have an eye on Peaks as well.

Regards
Primant


#2

Hi Primant,

The best way is to use both peaks and troughs. However I would advise that there are many subtleties one must be aware of, such as the price high or low not always being the cycle peak or trough.

One of my favourite phasings of the past year or so is the AUDNZD. Check out this example of a fantastic ‘dual’ analysis:


#3

Hi Guys,

My preference has been troughs & peaks for commodities where I often find peaks in many commodity instruments can be very reliable (once confirmed). Crude oil and natural gas are very good examples.

I also like troughs and peaks for currencies and use it for example on the CDNUSD pair. The analysis I started running last year signaling an important long term high was due for the $USD Index (was also a troughs & peaks analysis). This seems to work very well for the basket of currencies against the $USD. Also note that we did not have the Sentient dual facility when I first ran ST on the $USD Index last year. We only saw it come in later in the year and it is a great feature adding to the capability of David’s software. As for the $USD, that projection and analysis worked out very nicely. Let me add that there were busloads of US Dollar bulls post the US elections. Not so much anymore. :grin:

What bothers me right now in the commodity space is that the $USD has been straight down all year yet commodities have been so weak. Where’s the liquidity here other than into stocks … ??


#4

Peaks are an interesting subject, because there are two very different situations in my opinion:

  • Peaks in a market which has synchronized troughs

  • And peaks in a market with synchronized peaks

Hurst’s original work was mostly based on the US stock market which he demonstrated clearly has synchronized troughs. For a synchronized trough market, peaks are complicated, because they are not synchronized, and the M-shapes that cycles form in price tell us to expect two peaks, but knowing which of those will be the actual peak in price is fairly complicated. One can of course use FLD’s and VTL’s to confirm the peaks, but they are less reliable than they are for troughs.

The other situation, where you are analyzing a market that has synchronized peaks is much more straightforward because the analysis is simply inverted or turned upside down.

As a matter of interest, a bit of history to this whole concept of trough and peak synchronization. I have Ray Tomes to thank for introducing me to the idea of peak-synchronized analysis in commodities and precious metals. Ray’s Harmonics Theory provides an excellent understanding of how cycles work the way they do, and it has many areas of intersection with Hurst cycles. One of the big differentiating details of Hurst cycles is this concept of troughs (or peaks) being synchronized.
I remember driving around Auckland, New Zealand with Ray and discussing why troughs or peaks of cycles would be synchronized, and he said simply: “it’s all to do with emotion”. He explained that stock markets are generally holders of “optimistic” value, which is perhaps why the troughs of the cycles are synchronized. He suggested that commodities and precious metals were conversely holders of “pessimistic” value, and that I would probably find that the cycles had synchronized peaks. That evening at Ray’s house I experimented with inverting some price data, and running it through ST (then called The Hurst Trader), and that was the birth of “inverted” analysis in ST. Now of course we can do both analyses on a single chart, and I am constantly fascinated by how markets tend to produce a better trough or peak analysis.
Another interesting observation relevant to @David_F’s AUDNZD analysis is that when you have instruments (or currencies) from two different geographic places you will find their trough vs peak relationship is affected by their geographic relationship. Australia and New Zealand as neighbors will exhibit a unique relationship in this regard.
One day I’m going to do some more study of this phenomenon.


#5

Thanks for your inputs David. I guess it will take me some time to understand this thoroughly.


#6

Thank you very much for inputs Joes, May be one day i will learn this from you to have a better insight. My awareness level of cycle is poor at the moment, so will take time to understand all this.


#7

Thank you for your inputs David, While going through the video and correlating it with your these texts i could get some idea on why peaks are not discussed as deep as troughs.

However, as specified by @David_F and Jose i will go through these charts also to get finer details after doing my homework.