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Investment Analysis Clubs / Macro Economic Trends and Risks
|Subject: Technical Analysis Idea||Date: 4/21/2013 10:00 PM|
|Author: qazulight||Number: 421153 of 468855|
This is a short 6 minute video on Fibonacci numbers and plant growth. It gave me an idea, it will take me a while to explain it.
A long time ago in a century long past I was in ET school. I was anxious to get through the basics and get up to radio communications theory. I always wanted to understand what "AM" and "FM" really meant.
When I finally got into the class they showed how "AM" stood for "amplitude modulation" and how the first transmitters took a radio frequency carrier wave and imposed intelligence on it. In the beginning, (I will use round numbers here) the carrier was a signal cycling at 1,000,000 cycles per second and the intelligence was simply a 1000 cycles per second tone imposed on it. If you looked the carrier without intelligence,(modulation) on it on an oscilloscope you could see a sign wave or a solid blue (or green, depending on the screen) band across the scope. There reason for this is that you can adjust the time scale of the presentation. If you make the time scale very small, you can see the voltage of each radio frequency wave rise and fall, if you make the time scale larger, the wave rise and fall so fast that they run together.
This larger scale is nice because when you impose the 1000 cycles per second tone on to the carrier wave, you can see the voltage of the carrier wave rise and fall at the 1000 cycles per second rate.
Wow! I finally understood "AM". There was only one problem. I asked the instructor, "What is this switch? Why does it have AM, USB and LSB on it? And why do you call this radio a SSB transciever rather than an AM radio?"
You have no idea how long that lecture lasted, I will tell you that by the time was over he had to open a new set of dry erase markers.
I will try to shorten it up. Back when Marconi started with his radios, he saw what he was doing like was shown. A really fast radio transmission wave with a much slower signal changing it in amplitude.
However, some genius, and I do mean genius, looked at what was happening with a spectrum analyzer. Now the best way I can explain the difference between the oscilloscope and the spectrum analyzer is a fish tank. If you look a something from the front of a fish tank, then walk around to the side, you will see the same thing, but it will appear different.
When you look at the AM signal with a spectrum analyzer you realize that the carrier and the intelligence are actually occupying two different frequencies in the radio frequency spectrum. The intelligence will be some amount of power displaced from the carrier at frequency of the intelligence. In other words a carrier of 1,000,000 cycles per second with an intelligence of 1000 cycles per second imposed on it will appear in the radio frequency spectrum as a spike of power at 1,001,000 cycles per second, 1,000,000 cycles per second and 999,000 cycles per second.
What some genius engineer figured out was, we only needed the intelligence in power above the carrier, not the intelligence below the carrier, and we could recreate the carrier at the receiver. So, to save power he suppressed the carrier and the lower side band only transmitted a Single Side Band (SSB) and we typically use the Upper of the two side bands (USB)
I will not go into FM, or frequency modulation and the spectrum analysis of it, it will make your head hurt.
Now, to technical analysis.
We know that chart patterns are fractal, that no matter what time frame you move to, (except maybe in the HFT frame) that the same patterns have some predictive abilities. We also know that they fail. In other words the patterns rhyme but they do not repeat. Much like the flowers and Fibonacci sequences from the video.
Suppose we are looking at the markets from the wrong side. Suppose like the Oscilloscope and the Spectrum analyzer we need to have a different display.
Suppose instead of looking at the charts as price vs. time we turned them somehow and made a spiral chart that would fill in the leaves over time. Then we might have a clearer picture of the cycles.
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