The conviction level, pertaining to Trade Cycles by TradeSmith, tells you how many of the individual cycles agree on the turn area (peak or valley).
The conviction depends on two factors:
- The strength of each cycle, or how persistent it is. A stronger cycle has been sustained for a more extended time, while a weaker cycle may have just started appearing.
- The total number of cycles in agreement that any given security will hit a peak or valley. The higher the conviction level, the higher the probability that the event will occur.
Note: The conviction level pertains to the turn area (peaks and valleys) only, NOT any other Trade Cycle indicators (Volume-At-Price or Relative Strength Index).