Trend vs cycle, and valid trendlines

A trend is a slow cycle

On an hourly chart, a cycle that takes three months looks like a straight climb. On a weekly chart, the same move is just one swing of a wave.

So in cycle analysis, “trend” means the combined pull of all the cycles longer than the ones you are studying. It is not a separate force. It is the part of the rhythm that is too slow to see turning.

Why ordinary trendlines disappoint

Most traders draw a trendline through whichever lows look right. Two people looking at the same chart will often draw different lines, and a line can always be redrawn after price breaks it.

Hurst wanted a rule that leaves no room for taste.

The valid trendline

A valid trendline joins two consecutive lows of the same cycle. In a falling market the mirror image applies: two consecutive highs of the same cycle.

There is one more condition. Price must not have crossed the line between the two points. If it did, the line is not valid and should not be used.

Because the two points belong to one cycle, the line follows the slope of the cycle above it. It is a measured line, not a drawn opinion.

What a break tells you

While a bigger cycle is rising, the lows of the shorter cycle inside it step upwards. A line through those lows rises with them.

When price closes through the line, the shorter cycle has failed to hold its rising rhythm. That is a sign the bigger cycle has already peaked and turned down. In a falling market, a close above a line through two highs suggests the bigger cycle has bottomed.

A break confirms a turn that has already happened. It is not a prediction, which is exactly why it is useful: it removes doubt.

Using it well

Make sure both points really are lows of the same cycle. Lines through lows of different cycles mean very little.

The steeper the line, the sooner it tends to break. A shallow line holding for a long time says the bigger cycle has momentum.