## William Gann’s Square of NineIn this article we will discuss about one of the many methods of analysis William Gann used. He revealed some of his methods to be used by those patient and wise enough to study and understand them.
The following paragraph appeared in the December 1909 issue of “Ticket” Magazine. It was written by R.D. Wyckoff, the former owner and editor of the “Ticket”, and describes Gann’s proficiency for projecting price targets forward in time: “One of the most astonishing calculations made by Mr. Gann was during last summer (1909) when he predicted that September Wheat would sell at $1.20. This meant that it must touch that figure before the end of the month of September. At twelve o’clock, Chicago time, on September 30th (the last day) the option was selling bellow $1.08 and it looked as though his prediction would not be fulfilled. Mr. Gann said, ‘If it does not touch $1.20 by the close of the market, it will prove that there is something wrong with my whole method of calculations. I do not care what the price is now, it must go there’. It is common history that September Wheat surprised the whole country but selling at $1.20 and no high in the very last hour of trading, closing at that figure”. - Anniversary dates of major tops and bottoms
- 7 months after a major top or bottom for a minor reaction.
- 10 to 14 days is the length for a reaction in a normal market. If this period is exceeded, the next reaction should be expected after 28 to 30 days.
If you’re not already confused, understand that Gann’s year may not only be calendar, but “fiscal” as well; starting from major tops or bottoms. Gann’s time rules consider many periods, including seasonality, Biblical references, and astronomical events. Lets see a little example. This is an examples of astronomical correlations on a Gann chart. One of Gann’s beliefs, stemming from his “natural order” concept, is the influence of planetary movements on earthly events, such as the moon’s perceived effect in tides. This “cosmic perspective” of Gann is unlike conventional astrology, in that planetary influences, like units of price, are unique to each market.
The basic form is a square. The principle of making this square is very ingenious. The numbers are arranged in increasing order, in a specific pattern, starting with number one set in the centre. We can arrange as many numbers we wish. The numbers can be arranged starting from the middle, to the right and up, in a counterclockwise manner, or to the left and up, in a clockwise manner. When setting the Square of Nine we have to consider the trend’s direction. If the trend is ascending we will arrange the numbers clockwise, if it is descending we will arrange the numbers counterclockwise. After arranging the numbers we can observe some special similarities forming. For example on one diagonal we have the numbers 1, 9, 25, 49, 81, 121, 169 and so on. These numbers are the square of odd numbers 1, 3, 5, 7, 9, 11, 13 etc. On the same diagonal with 4 we have the numbers 16, 36, 64, 100, 144, 196 and so on which are the square of even numbers 2, 4, 6, 8, 10, 12, 14 etc. Is there a coincidence or is it harmony?
We will explain first the February 2007 High for S&P 500. That month the indicator had a High of 1.460 points. Let’s identify this value on Gann’s Square of Nine. The next month S&P 500 had a Low of 1.360. We will look for this value in the square also. This is the index’s chart: We can see below the two values on Gann’s Square of Nine. Between the centre of the square and these points there is an angle forming. This angle is about 250 degrees. This is Gann’s mathematical equation:
Why 1.4? In trigonometry 360 degrees is defined as 2; 180 degrees as 1; 90 degrees as 0.5; and 250 degrees as 1.4.
Let’s see now why the indicator has fallen 250 degrees. During the period of time we are referring to, on the sky we had two major astrological aspects: Saturn opposition Neptune (this means 180 degrees) and Sun square Pluto (this means 90 degrees). If we add them: 180 + 90 = 270 degrees. This value is very close to the actual fall of the index. The forecast would have been as it follows:
The result is 1.350. So the forecast would have said that the S&P 500 would have fallen to the value of 1.350 – 1.360 and than rise.
The facts were that S&P 500 had a Low of 1.370 and then started rising. Nice, isn’t it?
This example present the forecast for S&P 500 which had a historic High in October 2007 and a decline in January 2008.
The facts were that S&P 500 had a Low of 1.250 and then started rising. Is there a coincidence or is it harmony?
- This method of prediction is incredible exact and has a special harmony in it. It offers us correct ways of assessing future Lows and Highs for financial market’s indicators.
- Although it seems a complex and hard to handle method, it is a useful tool in our system of analysis. We have come to these conclusions after long years of thorough research. There are a lot of details to consider until a full understanding of the phenomenon but it can be done. We have understood Gann’s method. We give you simple and easy to apply analysis, but these analysis are the result of hard and meticulous work.
- We have also analyzed many past years and the rules apply. You can verify the correlation also if you are attracted to this kind of research work
- By showing you this study we are not trying to convince you that astrology is perfect. We just want to highlight the fact that there are correct ways of predicting the local High and Low and the reversal points. These kinds of studies helped us along the years build our trading system, the system we are basing our analysis and forecasts on.
"Written by FutureAnalyzer.com" |
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