1973 Crisis Analyzed


11 Mar
11Mar


Can the forecast models predict a long term crisis?

For that purpose the crisis of 1973 through to 1975 is analyzed.

I am using the following models:

- Two types of annual models (Dark-Blue and Grey), both are very similar. When there is a divergence between them it is time to analyze deeper near the divergence point.

- Two types of bi-weekly models (Orange and Velvet), both are very similar. When there is a divergence between them it is time to analyze deeper near the divergence point.


We start by placing the LBC (learning Border Cursor) at the beginning  of 1973 and running the 4 forecast models:

Insights:

1. Expected down-trend point and general change of direction from up to down/sideways.

2. Lowest point expected after 5 months

3. Expected local top Nov 1973

4. A divergence between the two annual models , we should analyze this point when arriving near.


We will now add the price and see what happened, focusing only on one year 1973:

As we can see, price follows the prediction to the week.

- General uptrend on 1972 was replaced with sideways / downtrend

- 1 Top, 2 Low, 3, Top



We are now re-positioning LBC on beginning of 1974 and run the 4 models again.

Insights:

4. Annual models did change direction and are aligned now,  both point to a low near 5 on Nov 1974.

5. Expected annual low

6. a divergence between the two bi-weekly models , near Aug 1974. We will need to analyze again near this date.


We will now add the price and see what happened, focusing only on part of one year 1974, from Jan  till Aug 1974:

As we can see, price follows the prediction to the week.

We are now re-positioning LBC on beginning of Aug 1974 and run the 4 models again.

Insights:

5. We still expect an annual low around Nov 1974. Annual cycles indicate possible beginning of uptrend, change in direction from downwards to upwards.

7. and 8. signal an optional low where 6 signals a local high (head and shoulders?)



We will now add the price and see what happened, focusing only on part of one year 1974, from Aug 1974 to end of 1974:

As we can see, price follows the prediction to the week.


We are now re-positioning LBC on beginning of  1975 and run the 4 models again.

Insights:

All cycles of annual and bi-weekly models indicate the beginning of uptrend fro Jan 1975. The crisis is about to end.

We will now add the price and see what happened, focusing only one year 1975:

As we can see, price follows the prediction to the week.


And thus we conclude this example. The forecast models predicted the crisis and the recovery after 2 years with an amazing accuracy. 


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