There are six most important principles of cycles: Summation, Harmonicity, Synchronicity, Proportionality, Variation and Nominality.
The principle of summation holds that all price movement is the simple addition of all active cycles. Cycle theory holds that all price patterns are formed by the interaction of two or more different cycles. The principle of summation gives us an important insight into the rationale of cyclic forecasting.
The principle of Harmonicity simply means that neighboring waves are usually related by a small, whole number. That number is usually two.
The principle of synchronicity refers to the strong tendency for waves of differing lengths to bottom at about the same time. It is also means that similar cycle lengths of different markets will tend to turn together.
The principle of proportionality describes the relationship between cycle period and amplitude. Cycles with longer periods (lengths) should have proportionally wider amplitudes.
The principle of variation is a recognition of the fact that all of the other cyclic principles already mentioned - summation, harmonicity, synchronicity, and proportionality - are just strong tendencies and not hare and fast rules; some “variation” can and usually does occur in the real world.
The principle of Nominality is based on the premise that, despite the differences that exist in the various markets and allowing for some variation in the implementing of cyclic principles, there seems to be a nominal set of harmonically related cycles that affect all markets. An that nominal model of cycle lengths can be used as a starting point in the analysis of any market.