Study of Gann concept and the implementations: Gann Reviews

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Jesse Livermore Vs. W.D. Gann – Who Was Better?

Jesse Livermore is known to most as the best market player Wall Street has ever heard about, rivaling perhaps even Gann. Livermore is alleged to have engaged in every single biggest stock and commodities moves from 1910 – 1940. He needed to be doing something right to just have survived monetarily for three decades.

Livermore might be a very good model for today’s computer stock trader. In the Livermore era there was no tv, no computing devices, and no world wide web. Even if were able to afford to pay a staff to chart stocks and futures you would not have had 24×7 immediate access to financial data files to keep those charts up to the minute. Any profitable stock trading system that could stand up to the test of time had to use easy to get data, be clear to understand, and be simple to apply. Contemporary technical analysis tools like stochastics and the elliott wave oscillator were out of the question.

His method was based on a trend following system. Livermore only took positions in the direction of the major trend. He opened his position with a minor stake and added to it as the trend persisted in its expected direction. Jesse Livermore said “Just recognize that the movement is there and take advantage of it by steering your speculative ship along with the tide.”

In or out. Long or short. Regardless of how many gigabytes you might have for your cutting edge, computer-based trading system it all comes down to those two choices. He set objective stop loss levels and bailed out immediately from his entire position whenever a stop was touched. Livermore did not feel pressured to trade each and every single day, neither did he try to catch every jiggle in stock prices. He followed only the major, cyclical trends.

The Livermore System defines the trading ticker in terms of trend and swing. An upswing, for example, is a consecutive series of higher pivot highs and higher pivot lows. An uptrend is a consecutive series of upswings. A downswing is a consecutive series of lower pivot lows and lower pivot highs. A downtrend is a consecutive series of downswings.

Trends and swings are determined by two filters. A larger swing filter and a penetration filter that is one-half the size of the swing filter. A change in trend is a retrace of swing filter size from the last up or down swing. A pivot is the high or low point of each swing. Time is not a thing to consider in the Livermore System or in the making of a swing chart.

Livermore utilized hand drawn swing charts that looked somewhat like a point and figure chart. As a substitute for Xs and Os and box sizes, a Livermore swing chart is a vertical line drawn when prices have moved by a fixed number of points in the opposite direction from the previous high or low pivot.

Livermore utilized penetrations of the pivot points to either add new positions when they occurred in the direction of the trend, or as stop-loss levels when they occurred in a direction opposite to the trend. The Livermore System is somewhat unique because of the role of the penetration filter. Many other swing trading systems use any breakout of a prior pivot high pivot or low pivot as the signal to add positions or as a stop loss level.

All positions were liquidated at the first penetration of a stop-loss level. A second penetration of the next occurring pivot in the direction of the new trend confirmed the new trend. A new trend “failed” when the second confirmation did not occur. In those cases Livermore would reenter in the direction of the prior trend when prices exceeded the size of the swing filter from the failed trend’s highest high or lowest low.

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The Basis of Gann Theory

The Law of Vibration
During an interview Gann once revealed that the secret to his trading was understanding the vibration of a commodity. The “Law of Vibration,” as he called it, explains the cause of the periodic recurrence of the rise and fall in commodities. The following excerpts are from an article Gann wrote that covers this topic in greater detail.

I soon began to note the periodical recurrence of the rise and fall in stocks and commodities. This led me to conclude that natural law was the basis of market movements. After exhaustive researches and investigations of the know sciences, I discovered that the Law of Vibration enables me to accurately determine the exact points to which stocks or commodities should rise and fall within a given time.

The working out of this law determines the cause and predicts the effect long before the Street is aware of either. Most speculators can testify to the fact that it is looking at the effect and ignoring the cause that has produced their losses.

It is impossible here to give an adequate idea of the Law of Vibration as I apply it to the markets, however, the layman may be able to grasp some of the principles when I state that the Law of Vibration is the fundamental law upon which wireless telegraphy, wireless telephone and phonographs are based. Without the existence of this law the above inventions would have been impossible.

In going over the history of markets and the great mass of related statistics, it soon becomes apparent that certain laws govern the changes and variations in the value of stocks and there exists a periodic or cyclic law, which is at the back of all these movements. Observation has shown that there are regular periods of intense activity on on the Exchange followed by periods of inactivity. Mr. Henry Hall, in his recent book, devoted much space to ‘Cycles of Prosperity and Depression’ which he found recurring at regular intervals of time. The law which I have applied will not only give these long cycles or swings, but the daily and even hourly movements of stocks. By knowing the exact vibration of each individual stock I am able to determine at what point each will receive support and at what point the greatest resistance is to be met.

Those in close touch with the markets have noticed the phenomena of ebb and flow, or rise and fall in the value of stocks. At certain times a stock becomes intensely active, large transactions being made in it; at other times this same stock will become practically stationary or inactive with a very small volume of sales. I have found that the Law of Vibration governs and controls these conditions. I have also found that certain phases of this law govern the rise in a stock and entirely different rules operate on the decline.

I have found that in the stock itself exists its harmonic or inharmonic relationship to the driving power or force behind it. The secret of all its activity is therefore apparent. By my method I can determine the vibration of each stock and by also taking certain time values into consideration I can in the majority of cases tell exactly what the stock will do under given conditions.

The power to determine the trend of the market is due to my knowledge of the characteristics of each individual stock and a certain grouping of different stocks under their proper rates of vibration. Stocks are like electrons, atoms, and molecules, which hold persistently to their own individuality in response to the fundamental Law of Vibration. Science teaches “that an original impulse of any kind finally resolves itself into periodic or rhythmical motion,” also, “just as the pendulum returns again in its swing, just as the moon returns in its orbit, just as the advancing year ever brings the rose to spring, so do the properties of the elements periodically recur as the weight of the atoms rises.”

From my exhaustive investigations, studies and applied tests, I find that not only do the various stocks vibrate; but that the driving forces controlling the stocks are also in the state of vibration. These vibratory forces can only be known by the movements they generate on the stocks and their values in the market. Since all great swings or movements of the market are cyclic they act in accordance with the periodic law.

If we wish to avert failure in speculation we must deal with causes. Everything in existence is based on exact proportion and perfect relationship. There is no chance in nature, because mathematical principles of the highest order lie at the foundation of all things. Faraday said: “There is nothing in the Universe but mathematical points of force.”

Through the Law of Vibration every stock in the market moves in its own distinctive sphere of activities, as to intensity, volume and direction; all the essential qualities of its evolution are characterized in its own rate of vibration. Stocks, like atoms, are really centers of energies, therefore they are controlled mathematically. Stocks create their own field of action and power; power to attract and repel, which in principle explains why certain stocks at times lead the market and “turn dead” at other times. Thus to speculate scientifically it is absolutely necessary to follow natural law.

After years of patient study I have proven to my entire satisfaction as well as demonstrated to others that vibration explains every possible phase and condition of the market.

This information helps us to understand a little more about the type of research W. D. Gann did to develop his analysis technique. The article should be read as background material, as it is beyond the scope of the material that is covered in this book. In this book I accept Gann’s basis for market movement and that the markets are being influenced by the Law of Vibration. I do not wish to explain how to prove the existence of the Law of Vibration, but find it more useful to write about how to use the techniques Gann used to trade the market. For example, I have assumed that cycles and vibrations exist and, at this point, do not intend to prove either their existence or the existence of their influence on the movement of stock and commodity prices.

[1] All quotations in this chapter about the Master Egg Course are from the W.D. Gann Commodities Course, and are reprinted with permission per Nikki Jones of Lambert-Gann Publishing Co., Box O, Pomeroy, Washington 99347
[2] As reprinted in the W. D. Gann Technical Review, vol. 1, no. 11, p.1, November 12, 1982
[3] From a missive on Gann letterhead with the title, “Soy Beans: Price Resistance Levels,” which originally came with the W. D. Gann Commodities Course, but which was left out of later reprints of the course.

Gann was a rare mathematician

Mathematics
Gann was a rare mathematician. He was a student of numbers, number theory, and the progression of numbers. He often said his analysis theory was based on natural law and mathematics.
Since time progresses as the earth turns on its axis, and time is measured by numbers and progressions of numbers, and since prices in their movement upward and downward are measured in numbers, we can understand why Gann had an intense interest in numbers, number theory, and mathematics. And remember….he did not have a personal computer, or even a handheld or desktop calculator-just a pencil.

Gann said his trading method was based on natural and mathematical law. For years he
refused to reveal any part of this method. The method was based on natural law, but the theory behind it was based on mathematics. Since price and time are denoted in mathematical terms (numbers), his system involved numbers and number progressions. He simply said he had researched far back into history and even went to India for old pre-Hindu records and philosophies as well as the ancient archives of the pre-Hindu period.

As we study Gann’s works, we begin to see the some numbers took a dominant place in his trading method. The square of numbers was an important issue with him, namely: 16, 25, 36, 49, 64, 121, and 144. He thought that markets moved in patterns sensitive to the price movement of these squares in terms of both price and time. For example, a rally in a specific market may have a tendency to find resistance 64 cents or 64 days from a bottom. Similarly, a decline in a market may find support 144 dollars or weeks from a top. This technique was combined with others that he developed, and it became a major part of his analysis tools.

Key Numbers
At this point, some of you may be discounting Gann’s methods because of their relative obscurity, but I would ask you to suspend disbelief. Gann found several numbers for a variety of reasons, some religious or spiritual, some historical, and some psychological. Whether or not his belief was reasonable or based on probable fact is largely irrelevant here-he used them as the basis for his trading, and they can work if incorporated properly into a technical trading system.

Gann researched numbers and cycles in many unique ways. Much of his research focused on the specific meaning of a number and how it relates to market movement. His research included the study of early Egyptian writings as well as cycle information. He also did extensive research of the cycles highlighted in the Bible. Records indicate that the early Egyptians considered the number seven to be the symbol of both earthly and eternal life. It is thought of as a number symbolizing a complete cycle, for seven is denoted as the number of time and rhythm. This information was used by Gann to develop a seven-day-cycle theory for short-term market moves.

Gann deemed three and one-half important, as it is half of seven, and in the Bible it occurs several times- for example, in the Book of Revelation, where the woman was sent into the wilderness for three and one-half years; during Daniel’s vision of 42 months (3 ½ years); when the Christ child was hiding in Egypt for three and one-half years; and during Christ’s public ministry, which lasted exactly three and on-half years. Gann used this information to study and research the 3 ½-day, -week, - month, and –year cycle, and applied the knowledge he gained to trade the market

Gann also considered the number nine important, as it occurs in the nine beatitudes recorded in Matthew’s Gospel, and he believed that nine corresponds with the number of stages of a disciple’s advance to a higher life. The number 12 was important to Gann, as it denoted space for him. He found it recurring in the twelve tribes of Israel, the 12 disciples, and the 12 houses of the Zodiac.

Other important Gann numbers are derived as follows: One year is 365 days, as this is the time it takes the sun to enter a hemisphere, move to the opposite hemisphere, and then return to the starting point. The movement of the sun produces definite seasons, affects crops and weather, and therefore has a dominant effect on our lives. For this reason the 30-day or sun cycle has dominance. Besides what has already been said about the number seven, it is important because of its link to the lunar cycle.

The number 144 was also important to Gann, whether because of there being 1440 minutes in a day (the decimal point is disregarded), it is 40% of a circle (360° x 0.40) = 144°), or because it is the square of 12. Numbers that occur repeatedly in the different sciences-such as mathematics, geometry, physics-cycles, and other natural studies were very important to Gann.

After studying mathematics and researching number patterns, Gann had to find a practical use for his newly acquired knowledge. Armed with this information Gann turned to the stock and commodity markets. After applying his strong background in mathematics to these markets, he concluded that markets adhere to mathematical law. From this conclusion he was able to develop his trading theory. This theory basically stated that market movement is governed by the forces of pattern, price and time.
PATTERN
In Gann Theory, pattern is defined as the study of market swings. Swing charts determine trend changes. For example, a trend changes to up when the market crosses swing tops and it changes to down when the market crosses swing bottoms. The trader can also gain information from swing charts about the size and duration of market movements. This how price, which is size, and time, which is duration, are linked to a pattern. In addition, the trader can learn about specific characteristics of a market by analyzing the patterns formed by the swing charts. For example, the charts delineate a market’s tendency to form double tops and bottoms, signal tops and bottoms, and the tendency to balance previous moves.

PRICE
In Gann Theory, price analysis consists of swing-chart price targets, angles, and percentage retracement points.

Swing-chart Price Targets
After constructing a swing chart, the trader creates important price information that can be used to forecast future tops and bottoms. These prices can be referred to as price balance points. For example, if the swing chart shows the market has had a recent tendency to rally 7 – 10 cents before forming a top, then from the next bottom, the forecast will be for a subsequent 7 – 10 cent rally. Conversely, if the market has shown a tendency to break 10 – 12 points from a top, then following the next top, the trader can forecast a break of 10 – 12 points. If the swings equal previous swings, then the market is balanced.

Angles
Geometric angles are another important part of the Gann trading method. The markets are geometric in design and function, so it follows that they will follow geometric laws when charted. Gann insisted on the use of the proper scale for each market when charting to maintain a harmonic relationship. He therefore chose a price scale that was in agreement with a geometric design or formula. He mainly relied on a 45-degree angle to divide a chart into important price and time zones. This angle is usually referred to as the “1X1” angle, because it represents one unit of price with one unit of time. He also used other proportional geometric angles to divide price and time. These angles are known as 1X2 and 2X1 angles because they represent one unit of price with two units of time and two units of price with one unit of time, respectively. All of the angles are important because they indicate support and resistance. They also have predictive value for future direction and price activity. All of which is necessary to know in order to forecast where the market can be in the future and when it is likely to be there.

Percentage Retracement Points
Just as Gann angles offer the trader price levels that move with time, percentage retracement points provide support and resistance that remain fixed as long as a market remains in a price range. Gann is commonly acknowledged to have formulated the percentage retracement rule, which states that most price moves will correct to 50%. Other percentage divisions are 25% and 75%, with the 50% level occurring the most frequently.

Gann believed traders would become successful if they used price indicators such as swing-chart balance points, angles, and percentage retracement points to find support and resistance. In essence, however, the combination of the two price indicators provides the trader with the best support and resistance with which to work. For example, while the uptrending 1X1 angle from a major bottom and a 50% price level provide strong support individually, the point where these two cross provides the trader with the strongest support on the chart.

TIME
According to Gann, time had the strongest influence on the market because when time is up, the trend changes. Gann used swing charts, anniversary dates, cycles, and the square of price to measure time.

Swing-Chart Timing
A properly constructed swing chart is expected to yield valuable information about the duration of price swings. This information is used to project both the duration of future upmoves from a current bottom and the duration of future downmoves from current tops. The basic premise behind swing-chart timing is that market patterns repeat: this is why it is necessary to keep records of past rallies and breaks. As a swing bottom or top is being formed, the trader must utilize the information from previous swings to project the minimum and maximum duration of the currently developing swing. The basic premise is that price swings balance time with previous price swings. However, in strong upmoves the duration of a rally is greater than the duration of a break, and subsequent upswings are equal to or greater than previous upmoves. Conversely, in strong downmoves the duration of a break is greater than the duration of a rally, and subsequent downswings are equal to or greater than previous downmoves.

Anniversary Dates
Among the timing tools Gann used is a concept he referred to as “anniversary dates.” This term refers to the historical dates the market made major tops and bottoms. The information collected in effect reflects the seasonality of the market because often an anniversary date repeats in the future. A cluster of anniversary dates indicates the strong tendency of a market to post a major top and bottom each year at the same time. For example, in order to predict future tops and bottoms in wheat, Gann claimed to have studied prices back to the twelfth century, noting not only the prices, but the anniversary dates – top to top, top to bottom, bottom to bottom, and bottom to top – were fundamental factors in this thinking. This information he learned from the research was very important to his analysis, and these dates gave obvious clues to another of his approaches to the market: time cycles.

Cycles
As mentioned earlier, Gann tried to build analysis tools that were geometric in design. When looking at anniversary dates he saw a series of one-year cycles. In geometric terms, the one-year cycle represented a circle or 360 degrees. Building on the geometric relationship of the market, Gann also considered the quarterly divisions of the year to be important timing periods. These quarterly divisions are the 90-day cycle, the 180-day cycle, and the 270-day cycle. In using the one-year cycle and the divisions of this cycle, you will find a date where a number of these cycles line up (preferably three or more) on a single point in time in the future. A date where a number of cycles line up is called a time cluster. This time cluster is used to predict major tops and bottoms. Time cycles are a major part of Gann analysis, and should be combined with price indicators to develop a valid market forecast.

Squaring The Price Range With Time

SQUARING THE PRICE RANGE WITH TIME
The squaring of price and time was one of the most important and valuable discoveries that Gann ever made. In his trading course he stated “if you stick strictly to the rule, and always watch when price is squared by time, or when time and price come together, you will be able to forecast the important changes in trend with greater accuracy.”

The squaring of price with time means an equal number of points up or down, balancing an equal number of time periods- either days, weeks, or months. Gann suggested traders square the range, low prices, and high prices.

Squaring the Range
When Gann angles are drawn inside a range, the angles provide the trader with a graphical representation of the squaring of the range. For example, if a market has a range of 100 and the scale is 1 point, a Gann angle moving up from the bottom of the range at 1 point per time period will reach the top of the range in 100 time periods. A top, bottom, or change in trend is expected during the time period when this occurs. This cycle repeats as long as the market remains inside the range.

Squaring a Low
Squaring a low means an equal amount of time has passed since the low was formed. This occurs when a Gann angle moving up from a bottom reaches the time period equal to the low.
For example, if the low price is 100 and the scale is 1, then at the end of 100 time periods an uptrending Gann angle will reach the square of itself. Watch for a top, bottom, or change in trend at this point. The market will continue to square the low as long as the low holds.

A graphical representation of squaring a low price can be seen on a chart Gann called a zero-angle chart. This chart starts an uptrending angle from price 0 at the time the low occurred and brings it up at one unit per time period. When this angle reaches the original low price, a top, bottom, or change in trend is expected.

Squaring a High
Squaring a high means an equal amount of time has passed since the high was formed. This occurs when a Gann angle moving down from a top reaches the time period equal to the high. For example, if the high price is 500 and the scale is 5, then at the end of 100 time periods a downtrending Gann angle will reach the square of itself. Watch for a top, bottom, or change in trend at this point. The market will continue to square the high as long as the high holds.

A graphical representation of squaring a high price can be seen on a zero-angle chart. This chart starts an uptrending angle from price 0 at the time the high occurred and brings it up at one unit per time period. When this angle reaches the original high price, a top, bottom, or change in trend is expected.

Time analysis in Gann Theory requires the trader to study market swings, anniversary dates, cycles, and the squaring of price and time to help determine future top, bottom, and change in trend points.
While the previous time studies require the trader to derive the data from actual charts, the basis of much of this analysis is drawn from Gann’s fundamental studies of financial astrology and his proprietary master charts. In the next section a brief discussion of the complexity of these two techniques is presented.

Advanced Price and Time Techniques

Natural Cycles and Financial Astrology
While this book covers the most conventional methods of time analysis, another important tool Gann used to analyze time was the study of natural cycles. A natural cycle is a cycle that cannot be altered by man. For example, although a twenty-eight day cycle in a market can be discovered through analysis of historical price action, a naturally occurring fourteen-day cycle is the moon cycle. While one cycle may be changed or altered as more data becomes available, the moon cycle cannot change. Since the moon cycle follows a natural law, its position can be predicted well into the future. To Gann the division of time by the natural cycles of the moon, the sun, and the planets was very important. For example, his thirty-day cycle was based on the sun cycle, and the twelve-year and eighty-four-year cycles were based on Jupiter and Uranus cycles, respectively.

The study of natural cycles, their origins, and their influences on the markets led Gann to develop a trading system based on financial astrology. Financial astrology is the study of how planets and their phenomena affect commodity and stock markets. The financial astrologer believes planetary influences are the cause of bull and bear markets.

Gann was often quoted as saying that there was nothing mysterious about his methods of prediction. He also claimed, in effect, that if he had the appropriate data, he could use geometry and algebra along with the theory of cycles to predict when a certain event would happen. This is ultimately the language of the astrologer. Also note that in much of his work Gann used the term cycle as did the Greeks (to the Greeks the word “cycle” meant circle, again an astrological term). Astrologers use math, geometry, and algebra to find the locations of the planets and the moon, study past effects when the planets were in certain positions relative to each other, the sun, and the earth, and then use their calculations to make their forecasts.

For years Gann made charts predicting the future of prices a year in advance (his annual forecast), and financial astrology was apparently the method he used in making these forecasts. Included in them was the exact price, the time of the day, as well as the day and month.

The fundamental principle behind financial astrology is that the planets’ orbits, rulerships, groups of planets, and the sun and moon have an effect on the minds and actions of people and events, and in particular, these planetary effects affect the cycles and prices of stocks and commodities. That in sum is the meaning of financial astrology. While you may wish to reserve judgment on this matter, the fact remains that Gann was expert at financial astrology, that he was totally committed to it, and that he used it as a means of improving his trades.

He was careful not to publish anything whatsoever on this use of financial astrology because he knew such a revelation would receive bad press, and the effect this would have on his status and his brokerage and advisory business.

Gann certainly broke new ground in financial astrology. Most astrologers are capable of using the longitude readings or time periods only. However, he was able to convert longitude to price, and was thereby able to generate a methodology for support and resistance levels. This was a new advance in financial astrology, and helps to explain how he could allegedly make call within one-eighth of a point on stocks for highs and lows. You can begin to see how he was able to make long-range predictions, as well as minute-to-minute forecasts.

Finally, the study of, but not necessarily the belief in, astrology played a major role in the development of Gann’s forecasting technique. Rather than try to explain how he used astrology, the following is an excerpt from a rare item that explains in great detail how he converted astrological analysis into price and time analysis and a trading system. Rather than write in his normal veiled language, in which astrological references were replaced with market terms, Gann used terms unique to astrology.

In the first paragraph Gann explains how to convert degrees to the planets to price to find support and resistance.
…67 (cents), add 90 gives 157 or 7 degrees Virgo. Add 135 gives 202 or 22 degrees Libra. Add 120 gives 127 or 7 degrees Leo. Add 180 gives 247 or 7 degrees Sagittarius. Add 225 gives 292 or 22 degrees Capricorn. Add 240 gives 307 or 7 degrees Aquarius. Add 270 gives 337 or 7 degrees Gemini. Add 271 ½ gives 438 ¼. High on May Beans was 436 ¾. After that high the next extreme low was 201 ½. Note that 67 plus 125 gives 202, and that one-half of 405 is 202 ½, and 180 plus 22 ½ is 202 ½, which are the mathematical reasons why May Soybeans made bottom at 201 ½.

All of the above price levels can be measured in Time Periods of days, weeks and months, and when the time periods come out at these prices, it is important for a change in trend, especially if confirmed by the geometrical angles from highs and lows.

Here, Gann created support and resistance levels using the longitude of the position of the sun. In the next excerpt, Gann used the longitude of the major planets to create support and resistance levels.

Active Angles and Degrees
By live or active angles is meant Prices and Time Periods where the Longitude of the major planets are or where the squares, triangles, oppositions are to these planets.

The averages of the six major planets Heliocentric and Geocentric are the most powerful points for Time and Price Resistance. Also the Geocentric and Heliocentric average of the five major planets with Mars left out, is of great importance and should be watched.

You should also calculate the averages of eight planets which move around the Sun as this is the first most important odd square. The square of “1” is one, and “1” is the Sun. 8 added to “1” gives 9, the square of 3 and completes the first important odd square, which is important for Time and Price.
Examples of live, active angles: At the present writing, January 18, 1954, Saturn Geocentric is 8 to 9 degrees Scorpio. Add the square or 90 degrees gives 8 to 9 degrees Aquarius and equals the price 308-309, for May Beans.

The planet Jupiter is at 21 degrees Gemini, which is 81 degrees in longitude from “0” the square of 9. Subtract 135 degrees from Jupiter gives 306 or 6 degrees Aquarius. This is why Soy Beans have met resistance so many times between 306 and 311 ¼. The Price Resistance levels come out strong around these degrees and prices and the Geometrical angles come out on daily, weekly, and monthly, but the Power of Saturn and Jupiter aspects, working out Time to these Resistance Levels, is what halts the advance in Soy Beans.

Example: December 2, 1953, May Soybeans high 311 ¼. This equaled 18 degrees 45’ in Pisces, close square or 90 degrees of Jupiter, 135 degrees to Saturn and 180 degrees of the averages, and 120 degrees of Uranus.

300 price equals 30 degrees Virgo. 302 equals 30 degrees Libra. 304 equals 30 degrees Scorpio. On January 18, 1954, the planet Saturn Geocentric is 8 degrees Scorpio, and 15 degrees Scorpio gives a price of 303, therefore when May Beans decline 302, they will be below the body or longitude of Saturn and will indicate lower. At the same time, using the Earth’s revolution of 365 ¼ days to move around the Sun, a price of 308 ½ is 90 degrees or square to Saturn. As long as the price is below 308 ½ it is within the square and in position to go lower. But by the 24th revolution, when the price breaks below 304, it is in the bear sign of Scorpio, a fixed sign and will indicate lower prices.

Study and analyze all options of all commodities in the same way as we have analyzed May Beans. Remember, when these Resistance Points are met you must give the market time to show that it is making tops or bottoms and getting ready to make a change in trend. Do not guess, wait until you get a definite indication to buy or sell against these resistance levels and place a stop loss order. Having before you all the information outlined above, you would certainly have gone short of May Soy Beans on December 17 at 296 because the price was down to the 45 degree angle from 44 on the Monthly high and low chart.

To a trained astrologer and experienced trader, these excerpts reveal an important link between pattern, price, and time. In addition, they also show that although using financial astrology can be a useful trading tool, a trader should not abandon conventional charting techniques, as both aspects have to be used together. For example, knowledge of astrology is necessary to interpret and convert the degrees of the planets, but knowledge of technical analysis techniques is still needed to build charts, interpret tops and bottoms, find support and resistance, and place stop orders. All of this information may seem complicated to follow, but remember the overwhelming theme in each paragraph is pattern, price, and time.

The Master Charts
Researching and trading required a tremendous amount of time, especially since Gann had to chart everything by hand. At the same time, he sensed the need to simplify his analysis by developing a pattern, price, and time chart that was universal and permanent. This became the motivating force behind the design and invention of the master charts.

Over the years Gann developed a number of master charts, including the Square of Nine, the Square of Four, and the Master 360 Degree Chart. These charts incorporated the best features of his price and time techniques, and provided him with a quick and easy way to forecast the market. The master charts can best be described as permanent charts in the form of circles, squares, and spirals, which represent natural angles and permanent resistance points for either price, time, or volume. Although it is claimed that he used these charts exclusively to trade late in his career, the Master Egg Course example demonstrates how he used this master charts in conjunction with his conventional bar charts.

It should be noted that these charts probably represent Gann’s life work, and should therefore not be used until the more conventional Gann analysis tools are mastered. Since deep study and research are necessary to learn how to use the master charts, a proper background in Gann analysis is necessary. This is why I consider the master charts beyond the scope of this book. In addition, the master charts are only available in his trading course.

Gann vs. geometric angles .... II

A complete set of Gann angles for daily data, usually consists of five to seven bull Gann angles and five to seven bear Gann angles. These angles are drawn from previous major highs and major lows, sometimes as far hack as the beginning of a contract. (The subject of how far to go back to draw these lines is another subject for discussion).

If a bull Gann angle intersects a bear Gann angle on a certain day, the trader could anticipate a possible change in trend direction.
The "strength" of the turning point is determined by the specific combination or number of Gann angles intersecting at a specific point in time. One bear and one bull Gann angle intersection may indicate a weaker turning point than if multiple Gann angels or Gann angles of stronger degrees cross each other at a certain point in time.

The greatest accuracy in price projection can only result if the location at which a line's slope intersects price, is consistent - if it docs not change regardless of overall chart scale.
Price scaling, as well, can affect line slopes for a number of reasons. Chart scaling of time is usually constant (one hour, one day, one week or one month). Not only are the number of price units important, but the space between the price units is critical.

In working with geometric angles, scaling for price and time is important in determining the slope of a line. The slope of a geometric angle would be affected by chart scaling. The slope of the Gann angle, however, is not affected by changing a chart's price or time scaling, as long as long as the issue's price-to-time ratio, remains constant.

SUPPORT/RESISTANCE LEVELS
Mention was made that Gann's research determined that prices will follow pre-determined Gann angles at different times of a trend. These slopes vary from a shallow 1×4 Gann angle occurring at the beginning of a trend to a super-steep 8×1 angle occurring at the end of a trend.

When a trend starts, for instance, prices may follow a 1×4 Gann angle (almost a horizontal price channel). As the price trend gains momentum, prices will move faster and jump to the next higher Gann angle (a 1×2 in this example) for support or resistance.

When momentum carries prices higher still, prices will jump to and follow along the next higher Gann Angle (a 1×1 then a 2×1, etc.) until the trend reverses.

Finally, when prices arc seen screaming up or down, prices are probably following a 4×1 or 8×1. An 8×1 is about as close a price trend will get to a vertical line. When prices arc at an 8x1, a trend turning point is near. This also echoes the general Gann rule that trends move slowest when beginning, before gaining momentum, and fastest when ending, when everybody recognizes what's happening and tries to hold out for one more dollar of profit.

TRADER. BEWARE
Often geometric angles arc equated with Gann angles, such as a 26-degree geometric angle equaling a 1×4 Gann angle, a 45-degree geometric angle equaling a 1×1 Gann angle or an 89-degree geometric angle equaling an 8×1 Gann angle. However, this should be done for illustrative purposes only.

if done for technical analysis, errors become inherent and results in incorrect price projections and support/ resistance errors result. To equate geometric angles with Gann angles may not be totally correct.

The one commodity, if not the only commodity, for which a 1×1 Gann angle may be equal to a 45-degree geometric angle is for gold. One unit of gold ($1) is the same for a unit of time (one hour, one week, etc.). Not all commodities are golden, however, and analysts should take care in applying Gann angles and geometric angles interchangeably.

Gerald Marisch is a trader for the privately held company, Dover Capital Investments LLC. E-mail him at gm@spfutures.com.

Gann vs. geometric angles .... I

Angles drawn on price charts are similar to trendlines except that they are not drawn with the benefit of hindsight. Two approaches to such angles, geometric angles and Gann angles, are similar but they are not the same. Here is how to apply each.

Analysts sometimes attempt to equate the line slopes known as Gann angles, with line slopes commonly known as geometric angles. If the intent is to illustrate Gann angles and approximate them to geometric angles, then there is agreement.

But if the inference is to suggest that a Gann angle is the same as a geometric angle (a 1×1 Gann angle for instance, equaling a 45-degree geometric angle) then there is some difference in opinion.
This article will clarify the difference between Gann angles and geometric angles - a subject that has been argued for longer than the question of whether the chicken or the egg did indeed come first.

GEOMETRICANGLES
In high school geometry, it is learned that a line connecting two points in space forms a geometric angle to the horizontal line.

We can easily adapt this to technical analysis of market prices. Connecting two or more lows, or two price points, forms a line of a specific geometric degree to the horizontal. Price is the only factor that is considered for determining the geometric angle at which the line rises or falls.

Horizontal and vertical lines form angles of O degrees and 90 degrees, respectively. How "high above" or "low below" the second price point is in relation to the first point determines the "angularity" - or slope - of the line.

GANN ANGLES
Gaiin angles are based on the analysis techniques of W.D. Gann. Gann was a well-known trader of the 20th century. His original works, and those articles, books, training courses and videos that followed him, are legion in number. As with most legends that have taken on a life of their own, separating fact from fiction about his abilities and techniques is becoming difficult.

One aspect of Gann's research went one step further than to use only geometric angles to define price slopes. Gann considered the time needed for prices to complete a rising or falling trend to be even more important than the price change in the market.

Resulting are Gann angles that define price-trend slopes not only as a function of price but also of time. Drawing lines from a major high or a major low and using a proportional ratio factor, unique for each market, determines the line's slope of ascent or descent. "Another angle" (right) shows how Gann angles can differ from a 45-degree line and across different markets.

The ratio factor is the determining factor for differentiating between a Gann angle and a geometric angle. When a chart's scale for price or time changes, the slope of a Gann angle will not change; the slope of a geometric angle will change.

For instance, using the Gann-angle concept, the line's slope of following the prices' rise in 30 minutes would be steeper than the line's slope at which prices rose the same number of points, but in 60 minutes.

Rather than identifying the priceline slope of his angles in terms of geometric degrees (33 degrees, 45 degrees, etc.), Gann identified his angles by the unique expression reflecting the ratio of price to time (A × B) in which:
* A is the number of price units by which prices rise or fall
* B is the number of time units required for prices to complete a trend by moving the number of price units.

Examples of Gann-angle expressions are 1×1, 2×1, 1×2, etc. A 1×1 Gann angle, for instance, means that price is moving at the rate of one unit of price (whatever a "unit" of price - or ratio of price to time - may be) in one unit of time (minute, hour, day, etc). The next faster Gann angle would be a 2×1, meaning that prices are rising (or falling) at the rate of two units of price in one unit of time.
Conversely, the next slower Gann angle before a 1×1 is a 1×2 - prices are rising (or falling) at the rate of one unit of price in two units of time.
Gann Angles, which could be bearish or bullish, assist in three goals of the technical trader:
1. Monitoring trend slopes
2. Projecting price turning points
3. Identifying levels of support and resistance.

MONITORINGTRENDSLOPES
Gann said that price trends follow certain pre-determined slopes. The angle of these slopes reflect the stages of a price trend.
For example, when a trend begins, the trend's slope is of a slighter degree - a "shallower" slope, such at a 1x4 Gann angle. At the end of a trend, a trend's slope may be "steeper," such as at a 4×1 or 8×1 Gann angle.

The best known expression related to Gann angles is questioning if prices are "at a 45," "above a 45" or "below a 45." These comments refer to prices being at (normal), above (demonstrating a bull market) or below (demonstrating a bear market) a 45-degree angle. Should prices break a 45, it may be an indication that the trend direction has, or is about to, change from bear to bull or bull to bear.

PROJECTING TURNING POINTS
Certain intersections of bear and bull Gann angles may indicate future turning points for prices.

Turning Points in History part 8

Terrorist attacks

The Al Qaeda terrorist attacks on the WTC in New York, and the war in Iraq remain very actual themes in the news.
Can we use our diagram to say something about it?
There was a first terrorist attack on the World Trade Center in 1993.
We can use that as the starting point in the diagram.
1993 was a #9 year in the new cycle that started in 1984.

From the first WTC attack by Al Qaeda in the 1993, we move forward in the diagram and the first square year we encounter is #13.
That is year 1997, when no major terrorist events happened.

Next we go on to year #17, which is opposite to our first point #9.
This is the year 2001, when of course the second massive attacks on the WTC took place.
Moving further in the diagram we get to year #21.
This is the year 2005, which saw large scale attacks on the London public transport system.
These were the largest attacks since 2001.

The next key year will be #25.
That is 2009.
So we can expect something that year, but we don't know what.
We could see another large scale 'event', but it can also mark end of the war in Iraq, since that war was started with these terrorist attacks as the main casus belli (justification for war).

Conclusion
From the given examples we can see how important key years in history, often fall exactly on the square lines based on the year of an earlier related event.
It confirms what Gann had observed in his research on stock market charts 100 years ago.
The key is in using the right year to start the count, and it seems to work quite nicely by using the Jia Zi years as 0 point.

We have used the very same diagram in all given examples, and it matches so often that it is almost scary.
How or why this works is not so easy to say.
Is it a kind of “structure of time”?
The phenomenon of “time” is still one of the least understood by our modern science, so who knows?

http://www.fourpillars.net/

Turning Points in History part 7

Cuba

Cuba is another case that many people are wondering about.
What will happen when Fidel Castro passes away?
When?

Fidel Castro came into power when his rebel forces took the capital in January 1959, in what is known as the Cuban revolution.

Since the Chinese New Year is around February 4th in the solar calendar, we consider this as still part of 1958.
In the cycle starting 1924 this is the #34 year.

The most recent important year for Cuba was #77 in this diagram.

That was year 2001.

Although there was no major change in the country, it was a year that Cuba improved its foreign relationships significantly.

It created better ties with the European Union, and it was the first time in almost 40 years it received shipment of food from the United States.

The next candidate year for major change in Cuba is #86.

So that would be year 2010.

Turning Points in History part 6

North and South Korea

North and South Korea were split in 1953 as a result of the Korean war.
The situation has remained difficult ever since.
When a change can be expected?
1953 was a #29 year in the cycle that started with 1924 Jia Zi year:

The most recent year that was square to the #29 start year is #78
That is year 2002 in this cycle.
It was the year that president Bush publicly branded North Korea as an “axis of evil” nation.
It has only isolated North Korea even further, but not improved their relationships.

The next year that offers good chances for change will be #88, so that is 2012.
It could also be late #87, 2011, as we can see that the line passes almost between the two.
We will watch the news.

Turning Points in History part 5

Taiwan

Taiwan is the continuation of the Republic of China, which was established in 1911, when the last dynasty of Chinese emperors was overthrown.
So we can use 1911 as starting point to find some important years for Taiwan.
1911 is in the cycle that started with 1864 Jia Zi year.
So it was the #47 year in that cycle:

After the Chinese government lost the civil war on the mainland it fled to Taiwan in 1949.
1949 is #85 in this cycle.
However, in the first years the situation was very unclear and it was not expected to last long.
Then the USA got involved in the Korean war and suddenly found it useful to protect Taiwan.
In 1952, Japan dropped its claims to the Taiwanese territory, which it had occupied for decades.

This paved the way for Taiwan to move forward on its own.
1952 is the #88 in this diagram, it was a very decisive year for them.
We see #88 again nicely on the square line to the 1911 starting year (#47)
#141 is another important year.

This was 2005, the year of strong pro-independence forces in Taiwan, but the path to independence was being blocked by mainland China, as we already mentioned above.
Interesting here is how the diagrams for mainland and for Taiwan both point to this year 2005.

The next potentially very important year will be #153, that is to be 2017
Some users of Gann's Square of Nine also use the semi-square (45 degree) angles, once it gets further from the center of the diagram.
In this case that would point to #147 , year 2011, as another possible year of great change for Taiwan.

Turning Points in History part 4

Communist China

Now let's take a look at some interesting examples that are still ongoing news.

People's Republic of China was established in 1949, after the communist party was victorious in the Chinese civil war.

In the cycle of 1924 this is the year #25

Let's see if we can use this number to find pivotal years in the history of communist China:

We will start with #65, which is opposite the #25 starting event point for communist China.

It is the year 1989, which was the Tiananmen Square protests and violent crackdown of the pro-democracy movement.

What we see here is interesting and important to remember.

East Germany had the same number as communist China, both started in 1949 , a #25 year.

So they also have the same years when major events and changes are likely.

But in East Germany the year 1989 was the fall of the Berlin Wall and then soon reunification, a happy event for most.

In China the year 1989 marked the violent crackdown of the very same energies.

It makes us clear the weakness of this method.

While it is quite good at pointing out important years, this method does not tell us if to be expected events will be “good” or “bad”, “happy” or “sad”..

For that purpose we need to carefully watch the events in the years leading up to the pivotal year, and try to bring in other astrological techniques to read the quality of expected events for that year.

Next important year, square to #25, was the #73

That is 1997 in this cycle, and was the year that Hong Kong was given back to China.

Clearly a quite significant year for China.

Next one , conjunct to #25, was the year #81

That was 2005. Not so much happened, but it was the year of massive pro-independence manifestations in Taiwan.

Mainland China stopped it by implementing their “Anti-secession Law” , which made clear that they had no plans to give up the one-China policy. Since then relations with Taiwan have reportedly warmed, but without really solving the issue.

Next one will be year #91. So that is coming year 2015.

It is too early to tell what changes that year could bring to the Chinese, so we just watch..
http://www.fourpillars.net/

Turning Points in History part 3

East Germany and the Berlin Wall

After WW2, East Germany (or DDR) was established in 1949
In the cycle starting with Jia Zi year 1924, this was the year #25
So we will use this as the major starting event in our diagram
In 1961 the famous Berlin Wall was erected.
This was year # 37 in the cycle.
Could we have predicted the fall of the Berlin Wall and subsequent end of the DDR in 1989 ?
1989 was a #65 year in this cycle.
This is the diagram:

#25 is marked in orange.
It is the start of DDR.
Construction (#37) and fall (#65) of the symbolic Berlin Wall are in blue circled years, on the same line nicely opposite the
#25 starting year.

We can see the system at work here.
If the Berlin Wall had not come down in 1989, then it may have been a wait till 1997 (#73), the next year that was square to the start #25

Turning Points in History part 2

Rise and fall of Nazi Germany

The “Third Reich” was officially declared by Hitler in 1933, shortly after he won elections.
In the cycle from Jia Zi year 1924, this is the year #9.
Now let's see how we could have used our diagram to pinpoint important next years:

Year #9 is marked by red circle. It is the start of nazi Germany.
Proceeding from #9, we now count forwards till we meet the first year that is square to our starting point #9
It is #13, so this is 4 years after the start, which means 1937.

Not very much happened in 1937, but it marks the year Germany started annexing other territories.
We continue forward and the next important year we find is #17.
This number is opposite to the start year #9.
Year #17 is 8 years after the start, which means 1941.

In 1941 the WW2 was already underway and the German armies occupied their maximum territory by then.
Most of Europe was under their control, and in Russia they had advanced to the gates of Moscow.
But that year marked the main turning point.
Moscow did not fall, and soon the German armies went in retreat.

We continue forward in the diagram and the next important year we encounter is #21, again square to the start position 9.
Of course #21 is year 1945 in this cycle.
It was the end of Hitler and his nazi Germany.

Turning Points in History part 1

An exploration into the structure of time.
By D.H. Van den Berghe

When we look at the world around us, we see change almost everywhere. In some places change seems to be slow, while in other parts of the world there are significant events that become turning points in the history of a country or even entire continent. We see such events every year in different parts of the world, but there is no obvious regular pattern as to when these events happen.

Various forms of astrology try to understand and predict these changes within the framework of cycles. Western astrology uses cycles based on the movement of the planets in our solar system.
Chinese forms of astrology work with fixed cycles of 9, 10, 12 and 60 years, and even longer..
Other cultures have still different systems.

And while each of these systems has merit and useful applications, none of them has been used very successfully in predicting the major turning points in a country's or region's history.

It is as if we are missing some important key. In this article I will present a method that may provide a new key, and allow us to predict upcoming changes more accurately.

Could we have predicted the fall of the Berlin Wall, or the September 11 attacks, or the Tiananmen Square massacre? All these examples and more, will be explored further on..

Gann's Square of Nine

The tool we are going to use in this study is called 'The Square of Nine' and was developed by W.D. Gann
W.D. Gann was a legendary trader in the stock markets, and he used this tool to make his predictions, which turned out to be amazingly accurate quite often. You can just google for “Gann square of nine” and you will easily find more about it. Although he did not publicly share the full details of his methods, it was known he used and studied this 'Square of Nine' intensively, and there were several copies of it in his office.

Here is a picture of such a Square of Nine:

The construction of the diagram is so easy, a child can do it.
You start with 1 in the middle and just spiral outwards, either going clockwise or counterclockwise (which doesn't matter for the use of this tool), filling up all the spaces..2, 3, 4..
In this example we stop at 361 in the lower right corner, but of course you could go on with 362 next to it , and then continue further upwards in the counterclockwise direction used here.
You can make it as large as you want, but this size is sufficient for our purposes in this article.
While this simple diagram looks like nothing very special at first sight, it does have rather unusual numerical relationships hidden in it.

For example if you start from the center 1 and go diagonally towards the bottom right corner, then you find all the squares of the odd numbers lining up:
9 = 3*3
25 = 5*5
49 = 7*7
81 = 9*9
121 = 11*11
and so on till infinity.. See that?

In the other direction, starting with the 4 above our center 1, we find all the squares of the even number lining up in direction of the top left corner.
4 = 2*2
16 = 4*4
36 = 6*6
64 = 8*8
100 = 10*10
and so on till infinity..
This is what makes this diagram unusual. Much more could be told about it, but that is beyond the scope this article.

Gann used it to study the movements in the stock markets, and what he discovered was that major events, climaxes and turning points had a strong tendency to occur at times that are in a “square relationship” to an earlier important date, event or turning point. To see what that means we have to turn to our diagram:

Suppose we have a major event in some 51st year (or day) (from where to count will be explained later). We have marked position #51 in clear orange in our diagram. Now what we do first is draw a straight line from #51 right through the center #1. This line will cross through all the years that are either conjunct or in opposition with our starting #51 event.

Then we draw a second line through the #1 center and exactly square on the first line. This line marks all the years that have a 90 degree square relationship to our starting #51. We can see that only a rather small selection of the numbers is on these lines, we have marked some with blue circles. Gann discovered that major events and changes happened much more frequently in the years that are on these lines. So, after year 51, the next major window of change would be year 59 (thus 8 years after the first major event).
Next year 67, then 75, 84, 93, 103, 113, 124, 136, 148,...
Notice how the first interval is 8 years, but expands and there is already a 12 year gap between 136 and 148.

That's what makes this system so different from any fixed length cycle.
And that could be the reason why sometimes our cycles seem to work and sometimes not.

I hope the basic approach is clear from above picture, but we have one question left before we can start using it.
How do we count the years or days? What is the starting point?
Gann himself reportedly used the Spring Equinox day as start and counted from there.
He mostly worked with daily numbers for his stock market forecasts, so that made sense.

But if we want to work on larger scale with yearly numbers, then we need some starting year.
Fortunately the Chinese astrology provides us.
In Chinese astrology it is the Yang Wood Rat year (Jia Zi) that marks the start of every new 60 year cycle. The most recent Jia Zi year was 1984, before that we had 1924.
These Jia Zi years also mark the start of a new major 20 year Period in Feng Shui.
So they are the first logical choice if we want to use Chinese astrology in combination with Gann's Square of Nine. How this works out you can see from the following examples.

Rise and fall of the Soviet Union

The October revolution in 1917 was the major event that marked the fall of the tzars and soon led to formation of the communist Soviet Union.
Year 1917 is in the cycle that started with Jia Zi year 1864. So it is year #53

In the late 1980's reforms started but it was not until 1991 that the Soviet Union was officially abolished.
Counting from 1864 cycle the year 1991 is #127
Looking in our diagram we see that #127 is exactly conjunct with the starting event #53.
So this was a year that strongly favored major change in the country.

W.D.Gann, Coffee, and Astrology

Written by Myles Wilson Walker

The following excerpts are from a letter that financial astrologer W.D.Gann wrote in 1954 in which he talks specifically about the planets relationship to coffee prices.He doesn't spell out the whole secret behind his timing but never the less it is very interesting and is also important as confirmation that astrology was behind his famous price and time forecasts. 1954:

March 24-Heliocentric Jupiter enters Cancer.
June 24- Heliocentric Jupiter is 120 degrees of Saturn.
April 12th Sun 60 degrees of Jupiter Geocentric.
April 13th Jupiter 135 degrees of Saturn Geocentric.
April 15th Sun 180 degrees of Neptune Geocentric.
April 16th Jupiter 60 degrees of Pluto Geocentric.
April 26th Jupiter 120 degrees of Neptune Geocentric.
April 26th Sun 180 degrees of Saturn Geocentric.

The month of April is very important.There should be great activity and wide swings in prices due to these aspects. GEOCENTRIC MAPS MOVEMENTS from low prices on coffee-- 1931 April 16th to August 7 1953- Mars has made 12 round trips.

1954 October 29- Mars will be opposite or 180 degrees from its place on April 16 1931.
1936 October 1st to to September 19th 1953- Mars made 9 round trips of 360 degrees each.
1954 Dec 9th- Mars will be 9 and a half round trips or opposite its place Oct.1 1936.
1940 May 15 to June 12 1953- Mars made 7 round trips or complete cycles.
1954 April 9th - Mars is 7 and a half cycles and is opposite its place on May 15 1940.
Due to the retrograde position of Mars it will again be 7 and a half July 7th and Aug.17
1954 or the third time in opposition to its own place which is very important. 1940
August 19 to September 15 1953- Mars had completed 7 round trips. Note low on coffee at that date.
1954 December 4th - Mars 7 and a half round trips or opposite its own place on Aug. 19
1940. If coffee starts to decline between March 22 and 24 1954 it should continue down to around April 15 when the adverse aspects of Jupiter to Saturn and the Sun to Neptune are completed.From these dates you should watch for the possibility of a rally up to April 16 1954 when Jupiter is 120 degrees of Neptune and the Sun 130 of Saturn.This might cause a quick rally followed by a sharp quick decline.

By studying all of the data outlined above and applying it to coffee you will be able to learn more about what causes changes in trend.

So there you have it, straight from W.D.Gann himself In my last article I did an astrological analysis of W.D.Ganns May Soybean chart based on the actual notations that he made on that chart.That dealt with Jupiters planetary ingress (Jupiter changing signs in the zodiac) and the price targets that this generated.Interestingly enough this same method as spelt out in my book Super Timing nailed the low on Soybeans again this year on July 9th.

In Super Timing I took all of Ganns trades that he mentioned in his last promotional booklet entitled -Why money is lost on commodities and stocks and how to make profits plus numerous other trades that I gathered from other sources.By doing this I was able to find the one common timing factor that linked all these trades plus price targets using one of W.D. Ganns calculators that I had discovered previously.I have called this the 1908 price target method named after the date that Gann said that he made his greatest discovery.

To my knowledge this is the first time that anyone has been able to unify all of Ganns
predictions using the same method.It solves his famous wheat prediction where Gann said wheat must trade at $1.20 by the close of trading on the 30th of September 1909 plus all the other price targets mentioned in The Ticker interview. It also solves the trades he made in 1954 at the end of his career on the coffee market using the same price and time method. The reason I think that his booklet Why money is lost on commodities and stocks and how to make profits was an important place to begin research on Ganns method is because it was written when he was 76 years old (one year before his death in 1955) and it was the perfect place for him to sum up what he considered to be the most important aspects of his work. Just to give you another idea of how planets can time the markets I will tell you another technique that I picked up when analyzing the sequence of trades that make up Robert Gordons great campaign in cotton from Ganns book The Tunnel thru the air.

Gann writes,

June 25th 1927.
October cotton declined to 16.80 Bought 500 October at 16.83 and 500 December at 17.15. He figured that it would run up for about thirty days.

July 25th 1927.
Sold 500 October cotton at 19.00 Sold 500 December at 19.20 Went short 500 December at 19.20. Decline followed as he expected.

To understand the reason for the timing of these trades just imagine a triangle and at each corner there is a planet.This is called a grand trine. What is happening in this case is that there are two slow planets that don't move much and they are 120 degrees apart(trine) Then a fast planet, Mercury in this case comes around so that it forms a triangle with the other planets (at the low of the market) it moves away so that there is no grand trine anymore but a month later the Sun comes around to where Mercury use to be and formsthe triangle again (at the high of the market).

This simple technique works but there is more to it than this and there were also price targets involved but everything is covered in depth in Super Timing as well the tools to do this work. As well as Ganns trades I've looked at examples from recent markets and find that the time and price target methods are still working well.To help people learn these techniques quickly I've also added a tutor that I originally wrote for the first purchasers of the book and put up as a website for them.This tutor is now at the end of the book and covers time cycles from recent S+P Soybean and Beanoil futures,these techniques can be used on every market. I havepurposely not covered any material presented elsewhere or rehashed the usual Gann knowledge that is in the public domain.

A Coincidence of Numbers

By Granville Cooley

In Book I “The Cycle of Mars” in the series “The PATTERNS of Gann” I told how a friend and I had put down the square of 144 on the weekly soybean chart of the late 1940 and early 1950 period as Gann had said to do. I said then that our reaction had been “So what?” Since we did not really see anything that caught our eye. Maybe you have done that and maybe you found something or maybe your reaction was the same as ours.

In Book I, I told of how I had laid out the heliocentric planets over this period with a little better luck. But I am never satisfi ed. I keep looking or PATTERNS. I want to fi nd things that make an exact fi t. My friend says I’m too exacting. He thinks I should be satisfi ed if things are within a number or two of being exact.

I have gone back to this chart many times, looking for that exact fi t. One day I took another approach and found what appears to be an exact fi t. At least there were enough of “coincidences of numbers” to make me think I had an exact fi t.

So take a look at the following workout and see what you think. Let’s put down the three important numbers on the chart. 436-the high in January, 1948 44-the low in December 1932 267-the number of weeks from January, 1948.

In my Book I, I told why the number of weeks might be 266, but since Gann had 267, let’s assume that it was not arbitrary. Let’s assume he had a reason for fi guring from that particular date. In other words, he didn’t just one day sit down and make a commentary on this period. He picked 267 weeks from the top for some reason.

He said that the square of 144 could be used for any squares we would like to make. But I put that square aside and decided to pick another. I picked the square of 49 or 7x7.Why? Because the chart we are dealing with is a weekly chart. If we lay down a square of 49, then it comes out on 49 weeks or 343 (49x7) days. And that would be a cube or 7x7x7.

You do not need to make up a square of 49 to look for the coincidences. You don’t need a computer. A hand-held calculator would be helpful, but you can do it with a piece of paper and a pencil. We don’t even have to have the chart. We can just picture it in our mind. At the top we have 436 and down under it we have 44 and on out to the right we can mark our 267 weeks. Now let’s use the square of 49 in the same way Gann told us to use the square of 144.

He subtracted the square of 144 from the top. So let’s subtract 49’s from the top, one at a time slowly and see if we can see any “coincidence of numbers.”
436-49=387, nothing there.
387-49=338, nothing there.
338-49=289, that’s the square of 17,
but doesn’t seem to mean much here. 289-49=240, yes, something here. Do you recognize it. Yes, it is 2/3 of a circle but it is also something else. It is the halfway point between the high of 436 and the low of 44 since 436+44/2=240.
240-49=191, nothing there.
191-49=142, nothing there.
142-49=93, nothing there
93-49=44, certainly something here.
We have subtracted 49 several times from the high of 436 and the result is the low.
So let’s put down the coincidences we have found so far:
(1) 240-the halfway point.
(2) the low of 44, by continually subtracting 49 from 436.

Gann put the square of 144 at the time of the 436 high and worked over, but I saw nothing there.Instead of doing that, I went over to 267 weeks and started subtracting the square of 49 from that. So let’s see if we can fi nd some other coincidence of numbers.
267-49=218. Yes right off we have found the halfway point of 436
218-49=169, another square, not much here apparently, but...
169-49=120, one-third of a circle, but not much else.
120-49=71, nothing here.
71-49=22, one half of the low of 44.

So let’s add those coincidences to the ones we already have:
(1)-240, the half-way point between 44 and 436
(2)-the low of 44, by subtracting 49’s
(3)-218, the half-way point of 436
(4)-22, the half-way point of 44

Just those coincidences alone look pretty good. But I kept looking for any others I might fi nd using the square of 49.

In his work Gann told about subtracting 360 from 436 and getting 76. We could subtract 76 from 436 and get 360. I decided to “add” 76 to 436 and I got 512! 512? Look familiar? Divide it by 8 and you get 64. Got it now? 512 is the cube of 8 or 8x8x8. Well, that’s very interesting you say but what does that have to do with the work at hand.

When we laid down the square of 49 on the weekly chart we were also counting the cube of 7 since a week has 7 days. The cube of 7 is 7x7x7 or 343. If you draw a 45 degree line down from 436 it will cross the week of 267 at 169. Or to put it another way 436-267 is 169. This coming out on a square (13x13) always intrigued me.

Remember in Gann’s discussion of the hexagon chart he mentioned that 169 was important for more reasons than one? I always wondered about that as maybe you have to. But somewhere along the way I found out one of the reasons. Let’s now subtract the cube of 7 from the cube of 8. 512-343=169! That’s right. The difference in the cube of 7 and the cube of 8 is the same as 436-267.

So there is another coincidence to add to our list.
(1)-240, the half-way point between 44 and 436
(2)-the low of 44, by subtracting 49’s
(3)-218, the half-way point of 436
(4)-22, the half-way point of 44
(5)-The 45 degree angle from 436 crosses the week of 267 at 169 which is also the difference in the cube of 7 and the cube of 8.

But I wasn’t done looking yet. You know me. Always adding, subtracting numbers, etc. I decided to “add” 267 to 436 and I got 703. To you that might not mean too much but it stuck out like a sore thumb to me. 703 is the triangle of 37. Look it up and see where it falls on the Square of Nine chart. It is also a Teleois angle (the book on that is in the works).

Now subtract 343 (the cube of 7) from 703 and you get 360! So let’s add those coincidences to our list.
(1)-240, the half-way point between 44 and 436
(2)-the low of 44, by subtracting 49’s
(3)-218, the half-way point of 436
(4)-22, the half-way point of 44
(5)-The 45 degree angle from 436 crosses the week of 267 at 169 which is also the difference in the cube of 7 and the cube of 8.
(6)-Adding 267 to 436 is 703, the triangle of 37.
(7)-Subtracting 343 from 703 is 360.

And now for some more.
When I added 76 to 436 and got 512, the cube of 8, I found that 436 was the “arithmetic mean” between 360 and the cube of 8 since 360 plus 76 is 436. (The arithmetic and geometric means were discussed in Book IV-”On the Square.”) The difference in 343, the cube of 7, and 267 is 76.

The number of weeks from the high of 436 to the low of 202 was 56 weeks. And for those of you who read Book IV you will recognize that as the geometric mean between the square of 7 and the square of 8 since 7x8 is 56.

In my book “On the Square” I showed where some prices were the differences in squares. We can see that the difference in 436 and 44 is a difference in several squares of 7. The difference is also equal to two squares, two squares of 14 since 14x14 is 196 and two times 196 is 392 and 436-44 is 392.

Now let’s add those coincidences to our list.
(1)-240, the half-way point between 44 and 436
(2)-the low of 44, by subtracting 49’s
(3)-218, the half-way point of 436
(4)-22, the half-way point of 44
(5)-The 45 degree angle from 436 crosses the week of 267 at 169 which is also the difference in the cube of 7 and the cube of 8.
(6)-Adding 267 to 436 is 703, the triangle of 37.
(7)-Subtracting 343 from 703 is 360.
(8)-436 is the arithmetic mean between 360 and the cube of 8.
(9)-76 is the difference in the cube of 7 and 267.
(10) From the high in January, 1948 to the low in February of 1949 is 56 weeks and 56 is the geometric mean between the square of 7 and the square of 8.
(11)436-44 is 392 which equals the sum of two squares of 14.

There are 11 coincidences in numbers we found with our original three numbers. What does it mean and how can they be used? Frankly I don’t know. But it sure cries for more study!

OK, want some more!
The difference in the cube of 7 (343) and the cube of 5 (125) is 218! The halfway point from 436.
In other words if we had an overlay with the cubes marked on it, when we put the cube of 7 (343) on 436, the cube of 5 (125) would fall on 218.
Where would the end of our overlay fall? Since 436 minus 343 is 93, the end of the overlay would fall on 93. Is the number 93 signifi cant? Why don’t you subtract 44 from it. You get 49!

Granville Cooley is author of the new book “The Patterns of Gann” available from TradersWorld. 800-288-4266

Time and Price

By Howard Arrington

William D. Gann (1878-1955) was a legendary trader who designed several unique techniques for analyzing price charts. He developed a unique combination of precise mathematical and geometric principles which are not easy to grasp. Gann analysts have spent years pouring over old charts and writings in search of Gann’s secret, and there is no end to the number of people who claim to have discovered Gann’s insight and technique that has eluded everyone else. Perhaps someone has discovered it. I am not in a position to appraise all the claims because I am not a Gann expert and have not read Gann’s writings.

Don Hall has published a book and developed a system called Pyrapoint which seems to me to be well founded in Gann principles. The purpose of this article is to take one idea used in Don’s work, and present it from a different approach, and yet arrive at the same useful conclusion. I hope even Don will fi nd my article to be an original insight to substantiate the validity of his work.

Gann’s geometric angles are trend lines drawn from prominent tops or bottoms at certain angles. The most important angle is 45 degrees, which means the line’s slope is one unit of price per unit of time. (Note: Depending of the chart scale used, the line may or may not appear to be plotted at a 45 degree angle.) For years, I thought this is what Gann analysts meant by the phrase ‘squaring time and price.’ However, Don’s Pyrapoint method gave me a new insight, which is:
Price = Time squared or P = t ^ 2

Let me take this mathematical relationship and develop it in this article. The above relationship between price and time can be plotted on a chart as shown in this illustration. The time values of 10, 20, and 30 are marked by the three arrows. See Figure 1.

For the sake of illustration, let’s suppose a prominent top or bottom occurs at a price of 400. The theory is that this signifi cant point has a mathematical counterpart. Start a new time curve at this point in time, and it will give us an expectation for a future top or bottom to occur on this curve. This principle can be stated as ‘When price meets time, a change is imminent.’ This ‘price meets time’ relationship is shown in the following chart. See Figure 2.

With the prominent top or bottom at P, if price meets the curve at point A it will do so in 18 bars. The time to A is the square root of the price at A. Price at A is 324. Square root of 324 is 18.

If price meets the curve at point B, it will do so in 20 bars. The time to B is the square root of the price at B. Price at B is 400, therefore the time to B is 20 bars.

If price meets the curve at point C, it will do so in 22 bars. This is a very interesting concept!

Remember that price and time are related by the formula:
P = t ^ 2 or t = sqrt( P )

In this article, I will develop the mathematics for the slope of a trend line using the price and time relationship presented in the previous article. Let’s work with the model illustrated in this See Figure 3.

From the previous article, the next time curve will be t bars away for a given price P. At a time t+1 price would meet the curve at price P1. Now, lets solve for the slope of the trend line shown in blue which connects P and P1.

P = t ^ 2

P1 = (t + 1) ^ 2 = t ^ 2 + 2 t + 1 = P + 2 t + 1

Slope = (Change in price) / (Change in time)

Change in price = P1 - P = P + 2 t + 1 - P = 2 t + 1 = 2 t + 2 - 1 = 2 [ t + 1] -1

Change in time = t + 1

Therefore, slope of P to P1 is = (2 [ t + 1] - 1) / (t+1) = 2 – 1 / (t+1) = 2 - 1 / sqrt( P1 )

If we normalize all prices to consider three signifi cant digits, then all prices will fall in the range
of [100 ... 1000]. By substituting the price boundaries into the slope formula,
we can get a range of slopes as follows.

For a P1 of 100, the slope of the up trend line to 100 = 2 - 1 / 10 = 1.9
For a P1 of 1000, the slope of the up trend line to 1000 = 2 - 1 / 100 = 1.99
The slope of the up trend line at the midpoint of this price range is 2 - 1 / sqrt(500) = 1.96

Let’s call this trend line a 45 degree line because we developed the slope using one unit of price change from P to P1 with one unit of time t. For this 45 degree line, the slope is basically 2. I
think this is strong justifi cation as to why Gann used 2 cents as the price grid interval of his daily grain charts. Such a scale layout would naturally give Gann 45 degree angles with a slope of 2 cents per daily bar. I have shown that 2 is the slope of the upward 45 degree trend
line that develops from the price and time relationship given by the formula: P = t ^ 2.

One can solve for the slope of the downward trend line from P1 to P to obtain this result:

Slope of P1 to P = (-2 t - 1) / (t-1) = (-2 [t - 1] - 3 ) / (t-1) = -2 - 3 / (t-1) = -2 – 3 / (sqrt( P ) - 1)

For a P of 100, the slope of the down trend line to 100 = -2 - 3/9 = -2.33

For a P of 1000, the slope of the down trend line to 1000 = -2 - 3/99 = -2.03

Again, the slope of the down trend line approaches a value of -2. Therefore, -2 is a good approximation for the slope of a downward 45 degree trend line.

Now I would not bother to give you the mathematics in the previous two articles if I did not fi nd application of this theory in the charts. I used the mathematics given in the fi rst two articles to
develop a tool in ESPL which draws horizontal lines at calculated price levels, and nearly vertical time curves at the calculated time intervals. This forms a grid of trapezoids like the previous illustration. (Don Hall calls them ‘squares’.)

Diagonal lines connect the corners of the trapezoids to give support and resistance trend lines.
Here is a daily chart of JNPR with the construction started on the highest high. All price levels, time intervals, and trend lines are constructed mathematically from two pieces of information: the price $244.50 on the date 10-16-2000.

There is more in this chart than I have space to explain. But, I can point out some haracteristics. The horizontal price lines have a label on the left which is a degree of rotation around a Square of 9. This is covered in the Pyrapoint book, but is beyond the scope of this article. Note that in my example, the time lines are nearly vertical. This is a slight variation from the method of construction in the Pyrapoint book which shows vertical lines. I feel that my presentation is appropriate because of the theory of the time curve illustrated in my fi rst article. The time curve forms the left and right sides of the trapezoid, and the price levels form the top and bottom sides.

Time: Time is measured by the time curve, which is related to price.
Tip: ‘As price meets time, a change is imminent.’
Note the first time line labeled 12 on the bottom and 16 on the top.
If price meets time at the -720 horizontal, then the time for the change would be the 12th bar from the top.
If price meets time at the -540 horizontal, then the time for the change would be the 13th bar from the top. At the -360 horizontal, the time change would be in the 14th bar. At the -180 horizontal, the time change would be in the 15th bar. At the 0 line, the time measured would be 16 bars.

That is why the top of the time line is labeled with a 16, and the bottom of the line is labeled with a 12. Starting at 16, for each 180 degree down the time count is reduced by one bar, or for every 180 degree rise, the time count increases another bar. Note that the market did experience a change when price met the time curve labeled 12 to 16!

The price at the 12 to 16 time line was used to obtain a forecast of the 2nd time line, which is labeled 25 to 31. As the price meets each time curve, a new time curve is calculated based on the price. Each of the time curves shows excellent correlation with market change when price met the time line.

Prices: The prominent high of $24.50 is the calculation basis for all the horizontal price levels that are shown.

Tip: The market seeks out these price levels, and you can calculate these prices in advance. Note how the market fell to the -540 horizontal, rallied to the -180 horizontal, fell to the -900 level, rallied to the -540 level, fell to the -1080 level, and rallied to the -720 level.

Trend Lines: The downward 45 degree trend lines shown in red create a flow channel, or ‘price highway’ as Don calls it.
The upward 45 degree trend lines shown in green create a price highway going the other direction.
The red lines are resistance lines that the market must close above to change direction from bearish to bullish.
The green lines are support lines that the market must close below to change direction from bullish to bearish.

We all have used upward trend lines placed underneath action lows to indicate support, and downward trend lines placed above action highs to indicate resistance. The beauty of this tool is that these diagonal trend lines are computed in advance, and the market seems to have respect for them. Price fl ows up and down the channels. The more you study the example, the more impressed I think you will be with this tool.

The Pyrapoint tool can also be applied to intra-day charts with good success. The size of the price interval used on a daily chart seems to be too big for use on an intra-day chart. No problem. Don points out that there are squares within a square. All one needs to do is subdivided the price interval into halves, fourths, or eighths. The time interval is determined from price and will not change.

One question that I have dealt with is this: If the time interval computes to be 11 bars because the price is at 121, which intra-day bar time frame should I use? If 1-minute bars are used, then we have a time curve 11 minutes later. If 2-minute bars are used, then the time curve would be 22 minutes later. If 5-minute bars are used, then the time curve is plotted 55 minutes later. Now do you see why I have a question? The selection of the intra-day bar time frame greatly affects the time interval measured by the next time curve.

Here is how I tackled the problem, and the proposed solution. I displayed a 1-minute chart and used a cycle tool to measure in hindsight the cycle rhythm from bottoms to bottoms, tops to tops,
and/or bottoms to tops. When I found a cycle width that seems to fi t by catching multiple turning points, I note the number of minutes in the cycle. I use this formula to estimate a good intra-day time frame to use.

Intra-day Bar Time Frame = Cycle width in minutes / sqrt( P )
Example: On the JNPR 1-minute chart I found a 65 minute cycle when the price was around $133. Therefore, bar time = 65 / sqrt( 133 ) = 5.6 minutes per bar. So, using a 6-minute chart, or
possibly a 5-minute chart should show a good fi t with the Pyrapoint tool. I happened
to have been following a 5-minute chart, and I do fi nd excellent correlation.
I have used a smaller price interval by subdividing the 180 degree interval into
eighths in this example. See Figure 5.

Please study the chart, and observe the fl ow of prices in the up and down trend channels. Note how trend changes occur on or near the vertical time curves, and how the market seeks the horizontal price levels. This entire road map is computed in advance from the prominent
top that occurred on January 12th at 9:35 a.m.

Mr. Arrington can be reached at Ensign Software, www.ensignsoftware.com. This article came from thier technical newsletter. If you are interested in the Pyrapoint System. You can purchase the Pyrapoint Book with the script and demo program on CD for just $179.95. + shipping. Call 800-288-4266 or go to www.tradersworld.com

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