cyclePack is a unique collection of cycle-analysis indicators brought to you by Divergence Software, Inc. Divergence Software, Inc. has been active in the eSignal community for quite some time, both in providing support on the eSignal bulletin board and in the development of free as well as commercial scripts for eSignal users. cyclePack is the culmination of many months of research and programming and, once you see the tools in action, we feel that you will be as excited as we are about its release.

What Does cyclePack Do?

The cyclePack indicators use state-of-the-art digital signal processing (DSP) techniques to extract the cycles that exist in your financial data and to gauge their significance. This information is then used to make forecasts as to how the security you are charting is likely to behave over the next several bars (or longer). While we would agree that there is no way to predict the future, the value provided by the cycle analysis process is that it can highlight likely short-term turning points as well as provide an indication of future market direction. Think of cycle analysis as an enhancement to traditional technical analysis techniques.

Why Cycle Analysis?

First of all, we are not talking about lunar cycles, planetary cycles, solar cycles or anything like that. We are talking about digital signal processing techniques and the science of time series analysis.

Cycles are present in all time series and in all time frames. Whether you know it or not, you make decisions based on cycles every trading day. Each time you add an indicator to your chart and set the length of that indicator, you are making a decision based on cycles. Each time you make a determination that a particular security will either start turning up in price or start heading down, you are making a decision based (at least in part) on cycles. Cycles are everywhere in our price data. Yet, for most traders, the concept of cycles is a poorly understand one and the cycles themselves are generally hidden from view.

Cycle analysis is the process of cleaning and filtering a time series (in our case, a series of security price data) and applying spectrum analysis techniques to extract the cyclical content. Once the cyclical components have been revealed, we can examine them and isolate the strongest and/or 'best-behaved' cycles. With that information in hand, we can then make educated projections in terms of how the security being analyzed will behave in the future. Cycle analysis can be a powerful tool when used in conjunction with existing technical analysis indicators and methods.

Information provided by Divergence Software, Inc here.