Estimating Dominant Market Cycles with a Detrended Zigzag
Summary
The Detrended Rhythm Oscillator is a cycle-analysis tool that applies a fast-versus-slow exponential moving average spread to price, then identifies swings in that series with a Zigzag. It measures the bar distances between successive highs or lows and combines adjacent swing lengths to estimate a median dominant cycle. The indicator can display the detrended swings, the underlying oscillator, labels for measured distances, and a final cycle-length readout.
The proposed use is diagnostic: look for recurring swing lengths and possible harmonic relationships, then use those lengths or fractions of them to tune other indicators. The document gives an illustrative cluster around 40, 80, and 120 bars, but reports no systematic validation. Zigzag pivots can change as new data arrives, and a cycle estimate is historical context rather than a forecast of the next turning point. Results may vary with the detrending and swing-period settings and with changing market conditions.
Key ideas
- A fast and slow EMA spread is used to detrend price before locating swing turns.
- The tool measures distances between successive high-to-high and low-to-low pivots.
- Adjacent swing lengths are combined, and a median is used as the dominant-cycle estimate.
- Recurring lengths and harmonics can inform indicator settings, but the estimate is not a turning-point forecast.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.