Phases of the Market Cycle

The market cycle consist of various phases. The following is a chart of UK100 / FTSE100. What you see is the fractal geometry of the market cycle. On the right you see a 3 candle breakout. A breakout on a lower time frame will always be a TIGHT CHANNEL. In both cases it’s a Bulls-only market.

The Breakout Phase, The Tight Channel and The Converging Channels

However, the third section of the chart is the Hourly chart. Here we have a trending channel that is converging to the right. So its swings are becoming smaller. I took this picture because I could predict with a degree of certainty that the next day will be something interesting.

Today, after the weekend, we saw the following chart. The Hourly chart had given us the heads up. The channel is broken with an outside bearish candle. After that it simply continued dropping.

The Market Cycle: Breakout > Trend Channel > Trading Range

This is a chart of DAX30 M1 Today the 11 of May 2021 during the London Session.

I posted the above in the chatroom. Later we saw the market created another kind of channel and then a trading range. Blue Shows The BREAKOUT PHASE The GREEN shows the Trend Channel (converging/Contracting) The Zone channel and Red zone shows Trend Bear Channel and Trading Range.

90% of the time the market will remain either in a channel or a trading range. only 10% of the time the market will remain in the Breakout phase.

Breakout > Bear Channel > Trading Range

Below I will show you 3 charts of FTSE100 from 11 of May 2021. The M5 chart is the one I traded. Pay attention to the breakout and how it turned into a trading channel and eventually a Trading Range. This happens ALL THE TIME.