TSS Channels…How and Why They Can Forever Change The Way You Trade The Markets
I discovered TSS Cycles in the 2000’s after reverse-engineering literally thousands (if not tens of thousands) of high-performing stocks and breakouts in various other trading instruments including intra-day indexes, futures and Forex.
What I basically learned was that when the correct cycle-based trend line (based on bar count) was placed, not only do you oftentimes get a finite number of bars before a trend reverses (5-15 additional down bars generally depending on the time frame you are using). but you also get an opportunity to catch the far extremes of the trend by creating a channel once the correct cycle line is identified.
It looks like this:
This was on SPY 5' bars pre-market
As price nears mid channel that is where you begin to look for a CH-4 entry zone.
Now, this was an exceptional run of $58 due to extreme volatility on the tariff news. Channel breakouts typically don’t produce anything near that much though will often give you the best breakout of the trading day.
Since this breakout occurred in the pre-market you would have had to trade XSP options to catch the breakout before the market open or have a dicey entry after the open as prices came back to retest the opening price.
Here is more on SPY vs XSP:
https://www.cboe.com/insights/posts/why-trade-xsp-vs-spy-a-breakdown-of-the-benefits/
Just in case you haven’t seen how we draw TSS Channels before:
CH-1 Begins a cycle-based trend channel
CH-2 Sets the lows of a cycle-based trend channel (for an upcoming bullish reversal) and sets the highs of a cycle-based trend channel (for an upcoming bearish reversal)
CH-3 Sets the final cycle-based trend line (across the highs in an upcoming bullish reversal and across the lows in an upcoming bearish reversal) which can now be used to create the TSS Price channel by duplicating the trend line and placing it across the far extremes of the other side of the channel and then splitting the difference.
And finally…
CH-4 is the end of the TSS Cycle channel and the beginning of the next price channel. (It becomes a new CH-1 channel).
CH-3 in a bullish reversal:
CH-3 in a bearish reversal:
Here is how it looks on the daily time frame on stocks:
This chart is Soundhound Daily (SOUN) and one of our trades from the fall 2024 cycle producing 10-X on the options.
Again, when these cycle channels are used in the proper context you can avoid all the unnecessary head fakes by waiting until CAT-3 CH-3 sets and watch for a 5-15 bar pullback (Bar 4 or 5 here).
Being a nimble trader (swing, day, position, etc.) by having TSS Cycles in your trading arsenal will make you more money with less stress and less being ‘glued to the charts.’
Wanna go next level?
Come trade with us:
Yes, but due to the number of tick levels and other exotic bars (range, momentum, renko, etc.) it may require some mild backtesting to get the proper settings.
No, with anything in the trading realm-it’s all about the odds…if an indicator gives you a 75-80% likelihood of a new trend starting those are pretty good odds and you can make a good living with those odds. If you enter tight in the cycle squeeze it is very possible to cut your risk to zero (assuming, there are no overnight gaps down to your buy zone) after just a few days in the trade on daily time frame swings.
Here is an example of quickly getting the stop to breakeven on the 5’ time frame on SPY:
By sitting on your hands until the cycle sets and then playing the pullback…if you get a tight entry then even if the breakout peters out and a new longer-term cycle comes into play, you can usually get your stop to breakeven and minimize any losses on ‘wrong turns.’
That is highly dependent on what happens prior to the CH-1 U-Pivot
Looking back at our previous chart on SOUN-here is the CH-1 U-Pivot:
We isolate the CH-1 U-Pivot and look back to the left and analyze the pre CH-1 set price action. With a huge gain of over 500% (5 BMI) and a Vector (VR) of 1 (fast speed) we look for a significant cup consolidation to account for the profit taking selling pressure that may occur for months after that pivot high is set.
Here are the typical high momentum cup consolidation TSS Cycles on the daily time frame:
CAT-1: TM-1 or TD-9
CAT-2: TM-2 (3.5 months)
CAT-3: TM-3 (5-7 months)
This would be my starting point but due to the big gain I would be looking further out at the next primary cycle TM-5 (12-15 months) in case the TM-3 cycle breakout fails…which it didn’t…
And we nailed it with cycles!