MCD is ready for a little $2.00 pop

This is the channel setup I normally have on my charts. I like to humor myself to the idea that I have went were Hurst never vent before. Basic concept is easy to understand. There is infinite number of cycles present in any stock fluctuation. Well it is kind of hard to deal with infinity. That is why traders when counting from low to low or from high to high quickly abandon idea as useless. The Hurst channel simplifies this job and it is nothing more and nothing less then an integration tool (remember math). Hurst was the first to introduce phasing to the cycle analysis. This made cycle analysisa trading tool it has always tried to achieve. Middle line of any Hurst channel represent sum of all the cyclical components with length greater than the length of the centered moving average used to construct the channel, all the smaller components are reduced or eliminated completely. Howdoes this helps us? From now on we are not concern with infinite number of cycles, all we want to know is when cycles get in phase. This event from one phasing low to next phasing low we will call a wave. The middle line of the “parent” channel shows almost perfect 2.5 - 3 days wave. Next ideal wave is due to bottom Friday this week. Be advised waves do change in length and magnitude but more gradual and orderly compared to a cycle.

In the example above three channels:   child (19b) parent (39b) and grandparent (79b). Child always has a hard time stopping the price action.You can see price piercing child’s channel this failure always confirmed by tcp.sellstop or tcp.buystop (length of channel) in this case 19 bars.  When the child and parent fail there is almost 85% chance that grandparent will support the price. What is the practical use one would ask?

1.      Always set you stop to the length of the channel you trade.

2.      Parent denotes dominant wave.

3.      Grandparent is you friend sorry trend.