KAMA Cycle Indicator: A Quantitative Framework for Monthly Cycles (Example on MU)

The KAMA Cycle Indicator is a transparent, methodological framework designed to analyze monthly cycles of any asset. The logic is simple and flexible: I use two adaptive moving averages (KAMA) and measure percentage deviation. When price drops below the slow KAMA past certain thresholds (e.g., -15%, -25%, -35%, -45%), buy alerts are triggered. When price rises above the fast KAMA, sell alerts are triggered (+100% partial, +200% full). All parameters are adjustable to fit any market.

📸 Visual Analysis: Example on MU (Micron Technology)
In this MU monthly chart you can see the indicator in action. The colored arrows are the automatically generated signals: yellow for the first three buy levels (L1, L2, L3), red for the fourth (L4), and green arrows for exits (+100% and +200%). The top‑right table shows current deviations from slow and fast KAMA, and the overall trend (Bull/Bear).

📊 Signal Logic

• Buy (accumulation) – triggered when price drops below the slow KAMA:
• L1 (-15%) → 🟡 yellow
• L2 (-25%) → 🟡 yellow
• L3 (-35%) → 🟡 yellow
• L4 (-45%) → 🔴 red
• Sell (distribution) – triggered when price rises above the fast KAMA:
• +100% (partial sell) → 🟢 green
• +200% (full sell) → 🟢 green

Important note: This approach is based on real data – I backtested the levels on Bitcoin cycle bottoms since 2011 (e.g., -37% in 2011, -23%/-28% in 2015, etc.). The same logic works for any asset; just calibrate the parameters.