3-DIMENSIONAL ANALYSIS

Three dimensional (3-D) oscillator analysis involves the evaluation of markets on 3 different levels—long-term, intermediate term and short-term(daily). When oscillators are run on 3 different time periods each level gives a different picture of the market. The longer and intermediate-term time periods generally indicate the tops and bottoms of the longer-term cycles. The daily time periods indicate the highs and lows of the daily cycles and often generate entry and exit patterns with a lower dollar risk than the longer time periods. Monthly data is used for the long term, showing the highs and lows of cycles longer than one year, and is also useful for identification of the Seasonal Cycle. Weekly data is best for identification of the highs and lows of the Seasonal Cycle and also the weekly Primary Cycles. Daily data is used to identify the Primary Cycle and the daily Trading Cycles. Intra-day data can also be used to identify and trade the Trading Cycle, as well as shorter-term daily and intra-day cycles using the same concepts. This book is oriented towards intermediate and long-term positions dependent upon the yearly cycles, Seasonal Cycles, Primary Cycles and Trading Cycles. However, for shorter-term traders the same concept—long-term, short-term, intermediate-term— can be applied on various short-term combinations such as weekly, daily, hourly; or daily, hourly, 13 minute time periods. The following soybean charts illustrate the use of 3-D analysis to identify the long-term cycle highs and lows through the use of overbought and oversold levels of different time periods. The examples show one oscillator for each time period. In normal analysis at least several oscillators should be used for each time period, and some of these would have high probability Setup/Trigger entry combinations to eliminate judgment calls. To get the most from 3-D analysis:

1. Use the monthly oscillator to establish parameters that indicate overbought and oversold levels of longer-term cycles.
2. Use weekly oscillators to establish parameters that indicate overbought and oversold levels of the Seasonal Cycles and/or the weekly Cycle.
3. Use daily oscillators to establish parameters that indicate the overbought and oversold levels of the Intermediate Cycle and/or the Daily Cycle.