Panic Cycle Model

The Panic CycleTaken from the Greek word “kyklos” meaning circle or returning to the point of origin. A rhythm or frequency of repetitive nature as in weather or in regular oscillations from peak to trough in a time series. row represents a model that searches for instances of cyclical target dates or time units in which abrupt or dramatic market price movement takes place.

• Given their abrupt or dramatic nature, panic cycles do not necessarily reflect changes in trend or a new high or low—they tend to align to short-term moves or temporary corrections.
• When abrupt or dramatic price movements occur in a market, humans and automated trading systems are both prone to react in kind, amplifying the movement.
• Panic cycles that come to pass (that is, take place during time unitThe time level being considered: days, weeks, months, quarters, or years. that has closed) tend to be one of the following:
  • A relatively dramatic price move in which it exceeds the previously-closed time unit high and penetrates the low from that previous time unit or vice versa.
  • A relatively fast, one-way price move, either exceeding a previous high or penetrating a previous low, but not both.