Market forecasting is the science and skill of determining in advance when the market is most likely to change direction and may also include the probability of the duration of the expected move.
Market analysis consists of taking data on current prices and applying technical analysis and / or fundamental analysis to determine what the market has already done and is doing now, and may or may not include market forecasting.
If market forecasting is included, the extent to which it will be included will vary from one analyst to another. The forecasting method can be simple, such as predicting the crossing of the indicator line or the reaction to breaking a certain level of resistance, or sophisticated to predict the date when the market is likely to change direction (new trend direction or start / end of trend correction).
The forecasting method included in my price data analysis is very sophisticated and naturally protected. The science behind my work is strongly based on the mathematics of market cycles. Market cycles provide a roadmap for future price movements and the likely peak of one transition to a new one.
There are different approaches to analyzing cycle fingerprint price data. These cycles are exposed to oscillators and moving averages (indicators), to the monitoring of seasonality, and even to the monitoring of various planetary bodies and the effect it has on the earth (products and psychology).
A trader or investor can make quite a few market predictions without having to delve deeply into the really technical aspects I use for my clients. Here are some suggestions to help you get started with trend and duration.
Start with a WEEKLY price chart.
Use the weekly price chart, where each price bar represents one trading week, locate the start of a new move. This means finding a clearly defined swing of the bottom or top from where the new direction starts.
Usually prices change direction in Fibonacci moments. For example, look for a possible turn 3 bars later, then 5 bars later, from 8 and so on. If you’re not familiar with Fibonacci, a lot is written about it.
Keep in mind that not only can you do this for any clearly defined swing at the top or bottom, but they will also overlap. For example, you may notice that a particular week is 8 weeks from the previous peak / bottom, and also 3 weeks from the most recent peak / bottom.
Never expect an accurate count constantly. If you subtract 55 weeks from the previous top / bottom, it is possible that this could happen in week 56. In fact, it is possible that this will not happen at all. Keep these pitfalls in mind.
The key here is to get a “time period” that you will focus on for a possible weekly turnaround. Then go to your daily chart and look for evidence of a possible trend reversal, such as overbought or oversold indicators and a likely reversal. You can even apply a timing approach to your daily chart and look for clustering in the weekly time frame for which you are analyzing. Grouping is when you have two or more results that indicate the same time period (within one or two days) based on counting from different previous peaks and bottoms. These are the time periods you want to watch.
There are so many valuable market forecasting techniques you can use to help predict future market developments. I have included 12 powerful methods in my book Secrets of Market Forecasting. By adding market forecasts to chart analysis, you can be ready at the right time to plan new business or exit existing stores. Another big bonus is that it helps reduce risk exposure, as there is no better place to enter a trade than at the very beginning of a new move.