Price and Time Rhythm (PR and TR)
The secondary MEs are rhythm -- price rhythm and time rhythm.
The markets often have regular price and time rhythm. But you cannot see them if you are not looking for them and doing some basic counting.
For time rhythm, measure the length of time (number of time units along the horizontal scale of a bar chart). Measure bottoms to bottoms and tops to tops; make an average of each. The closer the average is to each of the specific instances, the more regular the time rhythm.
For price rhythm, do the same measurements of uptrends and downtrends.
[caption id="attachment_13275" align="aligncenter" width="550"] ME -- Price Rhythm[/caption]
[caption id="attachment_13276" align="aligncenter" width="550"] ME -- Time Rhythm[/caption]
While all four of these elements can and have been precisely defined mathematically, simply eyeballing a chart for rough estimates is often satisfactory. You will be surprised how many areas on the chart you will find where price rhythm and time rhythm intersect. These are strong support and resistance areas.
A market has regular rhythm if in averaging the peaks and valleys, the average you derive is not far from any of the specific values.
For example, if you count price peaks and valleys as: 6, 3, 7, 4, 8, 4, 6, 3, 7, 5, 6, 2, and average the peaks (6, 7, 8, 6, 7, 6) and valleys (3, 4, 5, 3, 5, 2) you can see that this market has excellent price rhythm. But you cannot see it unless you look! Do you want to buy on a price or time peak or on a valley?
Tip: Many indicators actually tease out various ME elements. Sometimes it is easier and just as efficient to find that information by eyeballing a chart.