Application #3 - Chapter 4: Typical Parameters for Intermediate Trends

According to Pring, there are usually five intermediate trends in each primary trend. Remember that an intermediate trend lasts between 6 weeks-9 months and a primary trend tends to be 9 months-2 years long.

March 2020

It will go down in history as one of the bloodiest months in the markets, all thanks to COVID-19. While the last two years haven't been the most enchanting for real world events, what it has provided is a very easy identifiable start to a primary trend. The weeks following 12th March 2020 drawdown the market retraced entirely, setting the stage for the enormous bull run of the following two years. I identify the reversal for that downtrend to be in week commencing 31st August 2020.

Understanding that primary trends last between 9 months and 2 years long kinda puts us in a precarious position. I've identified two intermediate trends since then and we're now in a period of consolidation before the next major move up/down.

Intermediate Trend Identifiers

Some key identifiers of intermediate trends, with application to the BTCUSD chart:

• Usually five in a primary trend. I've identified four in the screenshot below

• Three are part of the prevailing trend (primary intermediate movement). Labelled with numbers 1 and 3. The third is yet to appear.

• Two are part of the counter trend (secondary reaction). Labelled with numbers 2 and 4.

• Secondary reactions are notoriously difficult to forecast and should be avoided for trading purposes as they invariably contain confusing whipsaws

• Primary movement usually encompasses two and a half intermediate cycles - using this assumption, we're coming to the end of this primary trend as we're down two intermediate cycles to date.

• Volume leads price and as in intermediate-term cycle 2 it's failed to increase above the levels of those witnessed in the up-phase of intermediate-term cycle 1 - this is a bearish sign.

• This has coincided with a downward crossover of the 40-week moving average and is an additional reason for caution.

• Furthermore, the retracement of intermediate-term cycle 2 is clearly over 80% of the leg up, placing the probabilities in favour of a change to the primary trend i.e. bearish change.

Summary

This took a while to get the application right as I kept making the mistake of using the daily charts, which were too granular to match up to the length of the trends involved.

Now it's finally over with, I've painted quite bearish picture based on the information I've learnt from the book. Not great if it turns out to be true but if it does - at least I saw it coming, right?! :-(