Translation

The reason that we study lows in cycle analysis is because longer and shorter cycles tend to synchronize at lows. Peaks, on the other hand, almost never synchronize. Peaks, ideally, should occur at the halfWay period of the cycle. A 20-day cycle, for example, should have a peak 10 days from its last low. This rarely occurs. Peaks can occur earlier or later than the halfway point. Their location away from the center point is called translation. A right translation in a cycle is when the peak is beyond the halfway point, and a left translation is when the cycle peak occurs before the halfway point. Usually, the underlying trend from a longer cycle determines the amount of translation in the shorter cycle. In Chapter 12, “Trends—The Basics,” we noticed that trend directions determined the shape of the corrective trends. In an uptrend, for example, the upward trends were long and the corrections were short. These were translating right because the peaks were beyond the halfway point between the lows. If the peak had occurred at the halfway point, we would be suspicious about the continuation of the upward trend. Because cycles are nested and synchronous, the shorter cycle is dominated by the trend of the next longer cycle.

The diminution of “rightness” or “leftness” suggests that the higher order cycle is also beginning to change direction. Translation is, thus, useful in checking where the overlying longer-term cycle trend direction is headed or if it is changing direction.

Source: Kirkpatrick II Charles D., Dahlquist Julie R. (2015), Technical Analysis: The Complete Resource for Financial Market Technicians, FT Press; 3rd edition.