Metodo Gann-1-90

Gann’s Method Geometry of Making Profit

by Mr Soumya Ranjan Panda

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Gann’s Method

3rd Edition -November 2011

“ I can only say that W.D.Gann’s method is one of the mathematical wonders. If you belief in the Vaastu geometry for designing your home or office then equally you must accept the Gann’s method for predicting the stock price“ -Ranjan

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Gann’s Method

Disclaimer M/s Smart Finance is an independent publisher of “Gann’s Method”. Examples given in the book are for the education purpose only. Opinions or suggestions are given with the understanding that readers acting on this information assume all risks involved. The information provided herein is not to be considered as an offer to buy or sell security of any kind. The author, M/s Smart Finance does not assume any responsibility or liability resulting from the use of such information, judgements, formulas or opinions for trading or investment purpose.

M/s Smart Finance #32/34, Mangalinagar 1st street, Arumbakkam, Chennai-600106. ph: 9840348971 www.smartfinancein.com

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Gann’s Method

“ Gann’s study has deeply inspired me to think beyond the cosmos. I think the entire universe is a perfect geometry.All the planets in the universe are in their perfect trajectory since million and billion years . Hence it is nothing wrong in using the geometry for price time forecasting ” -Ranjan

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Gann’s Method

Preface This book is having 8 chapters starting with the basic Gan wheel to the advanced Gann tools. The chapter -1 contains the basic gann wheel explanation , the number and the degree relation etc. From 2nd chapter to 5th chapter I have discussed the different relations of price, time and degree. In that course also you will find various interesting tricks and techniques to predict a trade . Chapter-7 has all the acceptable Gann tools.Chapter - 8 explains 34 intraday trading techniques. The complete understanding of this book will surely help you in making an accurate trade decision. -Ranjan

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Gann’s Method

“ For me Gann was one of the best mathematicians of his time and has done a great work which is beyond the thought process of his contemporary mathematicians” -Ranjan

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Gann’s Method

Acknowledgement This work is one of my most important achievements in life . I convey my sincere thanks to all my well wishers, friends and clients who have supported me in this course of development. My special thanks to my wife who is the 1st reader of this entire manuscript before it has gone to press for publishing. Her continuous support and encouragement made me to finish this work for the well being of the society. I have made an attempt to present the entire concept in the simplest manner but as a human being me too have some limitations in thought process . Your feed back is highly valuable to bring the modifications in my future editions. Soumya Ranjan Panda

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Gann’s Method

“Putting theory into practice is the best job which one can do. In this book I have made an attempt to do so ” -Ranjan

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Gann’s Method

CONTENTS Page No

Chapter 1: Introduction to Gann’s Method

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Chapter 2: Squaring Price With Price

25

Chapter 3: Current Price and Past Time

37

Chapter 4: Price Range and Time

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Chapter 5: Price Range and Time In Current Trend 67 Chapter 6: Gann’s angle and dynamic principles

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Chapter 7: Gann Tools and Technique

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Chapter 8 : 34 Intraday Trading Techniques

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Introduction to Gann’s Method

Gann’s Method

Chapter 1

Introduction to Gann’s Method 1.1 Introduction 1.2 Gann wheel 1.3 Gann wheel analysis 1.4 Degree to Price relation 1.5 Constructing Gann’s channel

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Introduction to Gann’s Method

Gann’s Method

Chapter 1 Introduction to Gann’s method 1.1 Introduction : William. D. Gann was one of the most successful traders of his time. Born in Lufkin, Texas on June 6, 1878 A.D, started commodity trading and stock market trading in 1902, and moved to New York City in 1908, opened his own broking firm, W.D.Gann & Co., he died on June 14, 1955 at Miami,Florida. His use of Natural Law and geometric proportions based on the circle, square, and triangle in the Stock and Commodities markets are effective today as they were 50 years ago. His techniques work in any market. His methods are seen to be a bit unusual and even mystical to many traders, but they have proven themselves time and again over the past century. 11

Gann’s Method

Introduction to Gann’s Method

The key point of his work is that he establishes the relation between the price and time after converting it into degrees. Neither I am a Gann expert nor I have attended any seminar conducted by the Gann experts. I just love his mathematical works and its application in forecasting the future price and time. Many Gann experts use the astrology with his work. Few s/w also available to predict the future price with respect to astrology using Gann method but I never knew those methods. What ever I am going to discuss in this chapter is purely a mathematical one and can be used with the help of paper and pencil. This book will start with the Gann wheel and will end at various squaring techniques. Technique for taking weekly, monthly trade decision are also included. I found that it is very much useful for taking the intraday trading decision. Hence there is nothing harm in using this. 12

Gann’s Method

Introduction to Gann’s Method

Though many Gann legends argue that this is the only and the only one way to predict the future price of a stock, but I do not agree with them. It is just a method but not a full proof technique to predict the future. If you ask me is there any full proof method to predict the future stock price. My answer will be - ‘No’. 1.2 Gann wheel: The Gann wheel is the numerical arrangement of numbers from 1 to 81 in a spiral manner. It is a table consisting of 9 rows and 9 columns. Many s/w program support 13X13 even more. The picture given in the next page is a Gann’s square of 9 wheel. The number one is placed in the centre then one circle is completed by placing 2 to its left, 3 on the top of 2, 4 on the right of 3, 5 on the right of 4, 6 below5, 7 below 6, 8 on left of 7, 9 on left of 8. One spiral is completed at this position. 13

Gann’s Method

Introduction to Gann’s Method

Gann Square of 9 Table

The second spiral starts from 10. Like this all the 81 members are arranged in the 9X9 table. The above table is the basic arrangement of numbers in a 9 X 9 table. 14

Introduction to Gann’s Method

Gann’s Method

Now go to little complex nature of this 9X9 table. Imagine this table placed inside a circle whose centre is at 1. Then the typical Gann wheel will look like the below picture as in section 1.3. Now don’t break your head to explore the wheel because we will explain it in detail in later section.

1.3 Gann wheel analysis: Now little bit concentrate on the Gann’s 9X9 table. If you imagine a circle having centre at 1 and the squared table is inside the circle. From Gann wheel imagine a circle having element 15 in its circumference and centred at 1. If the starting is the 0 degree then the number 45 degrees from 15 will be 17, the number 19 is 90 degrees from 15, 23 is 180 degrees up from 15 like wise 34 is 360 degrees up from 15. 15

Gann’s Method

Introduction to Gann’s Method

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Introduction to Gann’s Method

Gann’s Method

1.4 Degree to Price relation : Degree to factor table: Degree 360 degree 315 degree 270 degree 225 degree 180 degree 135 degree 90 degree 45 degree 22.5 degree

Factor 2 1.75 1.5 1.25 1 0.75 0.50 0.25 0.125

Why these factors? If you will imagine this movement as spiral then the arc length created by each one degree movement is almost 5.55 X 10 -03 unit assuming the diameter of the spiral starting with 1. Based on this concept the factors are being derived. 17

Gann’s Method

Introduction to Gann’s Method

Now see the number relation with the factors. Example 1: Which number (say N) is 1800 down from number 15? N = ( 15 -1)2 = 8.25. If you will neglect the decimal part then the integer part will be 8. If you observe the Gann table then the number is exactly what we have found out through the calculation. Example 2: What number (N) is 1800 up from number 34? N= ( 34 +1)2 =46.66. If you will neglect the decimal part then the number we will get is 46. It is exactly what we have found in Gann table. Gann specifies that 450, 900, 1800, 3600 are the potential resistance and support for a particular stock price. 18

Gann’s Method

Introduction to Gann’s Method

Example 3: On 30th August 2007 SBI, OHLC data are as follows (1570, 1618, 1570, and 1596). Based on Gann’s degree to price relation how to generate the most likely support and resistances for the next trading session? Before applying the Gann technique let us analyse the data for knowing the direction. Simple techniques to analyse these data points. Take the 5 days moving average MA (5), 10 days moving average MA (10) and 30 days moving average prices MA (30). For our example MA (5) = Rs 1570/-, MA (10) = Rs 1520/-, MA (30) = Rs 1571/-. My closing price is well above 5 days moving average. Hence in short term I will expect a positive move in the script. Also it is a coincident that my low is exactly equal to the MA (5), If not also no problem.

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Gann’s Method

Introduction to Gann’s Method

Now I will start my calculation from the day’s low of 1570.

DEGREE 45 90 180 360

UP 1589.874 1609.873 1650.246 1732.493

DOWN 1550.251 1530.627 1491.754 1415.507

Above table represents that 1589 is 450 up from 1570 and 1550 is 450down from 1570. My closing is well above the 450 up price. Hence my next upside resistances will be 1609-1650-1732 support 1589-1550-1530. Gann trader follows this rule as to enter a long trade once the price crosses 450 up from the days low, keeping the stop loss at 450 down from the days low. The target will be above 900 -1350- 1800 data points. 20

Gann’s Method

Introduction to Gann’s Method

Is this method useful for intraday? It is one of the best methods for intraday. You need to have 2 minutes or 5 minutes data.Consider the hourly high or low point. The starting point will be 22.50 or multiple of it. We have many interesting methods which are explored in subsequent chapters. Hence read all the techniques before applying it into practice.

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Introduction to Gann’s Method

Gann’s Method

1.5 Constructing Gann’s channel: Step 1: Consider the most significant low. Step2: Compute the 45 degree, 90 degree, 180 degree, 360 degree, 540 degree, 720 degree price up from the low. Step 3: Draw the horizontal lines at those prices. Step 4: Take the square root of low and adjust it to an integer value. Say it as B. Sept 5: Draw the vertical lines by counting the B number of days from the low. Continue this process for 4 to 5 steps. Step 6: Draw the channels by joining the intersections, points of the horizontal and vertical grids. 22

Gann’s Method

Introduction to Gann’s Method

Example : Construct a Gann channel using the swing low of SBI ? Do this as your 1st assignment.

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Gann’s Method

Introduction to Gann’s Method

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Squaring Price with Price

Gann’s Method

Chapter 2

Squaring Price with Price 2.1 Introduction 2.2 Squaring price with price 2.3 Converting price to degree 2.4 Trade decision using price squaring action

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Squaring Price with Price

Gann’s Method

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Squaring Price with Price

Gann’s Method

Chapter 2 Squaring Price with Price 2.1 Introduction: Gann always stressed upon three things in order to predict the future price movement of a stock or commodity. They are 1. Price, 2. Time 3. Pattern. He establishes the geometrical relation between the price and time for predicting the future movement. If you see Elliot’s wave theory, Gann theory and Fibonacci theory, you will find one common thing that all these theories are based on the harmonic nature of price. This is a truth in the capital market. 2.2 Squaring price with price: In chapter-1 I have discussed how the price is related to each other in a Gann’s square of 27

Squaring Price with Price

Gann’s Method

nine table. Before going deep into the subject we should understand the Gann square. Gann always specified that price, time and pattern have a strong relation with the geometrical figures like circle, triangle, rectangle and hexagon. He also proved it that the prices falling in the edge, diameter of these objects are the key resistances and supports of the current price movement. What is a Gann square? The rectangular spiral formed by placing a number at the centre of the object is called a Gann square. In chapter-1 Gann wheel picture the four dimensional body inside the circle is called a Gann square. The horizontal line and the vertical line containing the Gann squares centre number are called cardinal. 28

Squaring Price with Price

Gann’s Method

Gann Square 57 56 55 54 53 52 51 50 81

58 31 30 29 28 27 26 49 80

59 60 61 62 32 33 34 35 13 14 15 16 12 3 4 5 2 1 6 11 10 9 8 7 25 24 23 22 48 47 46 45 79 78 77 76

63 36 17 18 19 20 21 44 75

64 37 38 39 40 41 42 43 74

65 66 67 68 69 70 71 72 73

Construction of the Gann square is quite easy. It requires three inputs that is the starting price, increments and the factor. If you see the above Gann square table the starting price is 1, increment is 1, and the computing factor is also 1. Many working model is available on line to construct Gann wheel. 29

Squaring Price with Price

Gann’s Method

What is Gann angle? Gann has specified 11 different angle combinations as follows: 1 X 16 = 86.25 degrees 1 X 8 = 82.5 degrees 1 X 4 = 75.0 degrees 1 X 3 = 71.25 degrees 1 X 2 = 63.75 degrees 1 X 1 = 45.0 degrees 2 X 1 = 26.25 degrees 3 X 1 = 18.75 degrees 4 X 1 = 15.0 degrees 8 X 1 = 7.5 degrees 16 X 1 = 3.75 degrees 1X1 angle is translated as one unit rise in price with one unit rise in time.Though Gann does not specify any scale on 30

Squaring Price with Price

Gann’s Method

how to place price and time in the X and Y axis to derive these degree but Robert W. Colbyin his book “the Encyclopedia of Technical Market Indicators” Second Edition, McGraw-Hill Publishing, 2003 mentioned that one unit of price will be taken as 1/16th of an inch and one week of time period will be taken as 1/16th of an inch to draw ganns chart. But this is a standard followed in all the s/w having the gann tools. In very simple words, ‘Gann angles are the slopes of the line made with x axis if you will place prices and time in the order of 1X1,1X2,1X8 and so on.’ 2.3 Converting price to degree: Formula: - Mod ((sqrt(N)*180)-225,360) This excel formula will convert any number of your choice into degrees. Numbers having same degree line square with each other and considered as the major support and resistance area. 31

Squaring Price with Price

Gann’s Method

Example: Below mentioned are the 4 weeks OHLC (open, high, low, and close) data of SBI. Explain price squaring relation? Date Open High Low Close D1 D2 D3 D4 30-07-2007 1524.45 1614.8 1509.8 1578.05 323 168 289 85 31-07-2007 1622 1635.6 1540.05 1623.85 184 215 359 188 01-08-2007 1610 1610 1540.2 1548.05 157 157 359 17 02-08-2007 1550 1626 1544 1592.8 21.6 193 7.88 119 03-08-2007 1620 1652.4 1610 1635.75 180 252 157 215 06-08-2007 1610 1699 1580 1681.9 157 354 89.9 317 07-08-2007 1690 1725.9 1672.55 1682.1 335 52.9 296 317 08-08-2007 1700 1734.8 1698 1706.85 357 72.2 352 12 09-08-2007 1727 1728 1641 1650.6 55.3 57.5 227 248 10-08-2007 1601.55 1614.95 1575.2 1606.95 138 169 79 151 13-08-2007 1620 1629.9 1595.1 1613.05 180 202 124 164 14-08-2007 1636 1636 1604 1615.3 216 216 144 169 16-08-2007 1550 1557.9 1517.25 1520.95 21.6 39.6 306 315 17-08-2007 1510 1543.7 1461.05 1519.2 290 7.19 175 311 20-08-2007 1575 1590 1540.05 1549.65 78.5 112 359 21 21-08-2007 1565 1565 1451.25 1463.3 55.8 55.8 152 181 22-08-2007 1472.05 1504 1420 1458.8 201 276 77.9 170 23-08-2007 1480 1499.9 1407 1414.75 220 266 46.8 65 24-08-2007 1455 1472.9 1425 1466.05 161 203 89.9 187 27-08-2007 1519 1563 1486 1554.75 310 51.3 234 32

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Squaring Price with Price

Gann’s Method

In the above table I have converted all OHLC data to degree format by using the above formula. Now consider 27th August closing price 1554.75 which is 32 degree. All closing prices having 32 degree or multiple of 32 degree will square with this price. You can grant error up to 7 degrees. Hence 23rd August 07 price 1414.75, 13th August 07 price 1613 squares with the prices and act as the support and resistances of the next move. 2.4 Trade decision using price squaring action Whatever I have discussed earlier is with respect to the past event. Now see the present event. Gann traders believe that the prices 45 degree, 90 degree, 180 degrees are important for trade decision. Hence price above or below from the present price by 45 degree, 90 degree, 180 degree factors will act as a point of trade decision. Squaring angles up from the computed angle 33

Gann’s Method

Squaring Price with Price

(i.e. in our example 32 degree) is calculated by adding 45, 90,180 to the computed angle and vice versa. Below mentioned table displays the squaring angle of 32 degree and its price conversion using square root formula (explained in chapter 1). Angles up from 32

77 122 212

Angle factors 0.43 0.68 1.18

price 1589 1609 1649

0.072 0.32 0.82

1549 1529 1491

Angles down from 32

13 58 148

With respect to the closing price of 27th August 07 i.e. 1554.75 the next level of resistances are 1589, 1609, 1649 and support 1549, 1529, 1491. 34

Gann’s Method

Squaring Price with Price

Below mentioned data is the price data from 27th August to 3rd September 07. Date Open High Low 27-08-2007 1519 1563 1486 28-08-2007 1575 1575 1541 29-08-2007 1504.1 1585 1504.1 30-08-2007 1584 1604.7 1559 31-08-2007 1570 1618 1570 03-09-2007 1619 1623 1602.35

Close 1554.75 1550.6 1573.85 1570.85 1600.35 1606.65

On 28th August if I have to initiate a trade in the opening session using this principle then I will observe the opening price which is well below the 1st level of resistance 1589. This is also the price falling below 45 degree line. it is a bearish signal. I will enter a sell order keeping my stop loss at 90 degree up price i.e. 1609. my initial target will be 45 degree down price from 32 degree price point that is 1549. If you observe the 28th day data then I am very much in the target. 35

Gann’s Method

Squaring Price with Price

This method is not discussed by any gann expert. Based on gann principle, taking the previous day data I have innovated this static technique for day traders. This is one of the best static techniques for day traders. I never claim that it is a full proof technique but it works well in an unbiased and less volatile market. You can experiment this with 60 degree and its multiples also.

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Gann’s Method

Current Price and Past Time

Chapter 3

Current Price and Past Time 3.1 Introduction 3.2 Squaring current price with past time 3.3 Conclusion

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Gann’s Method

Current Price and Past Time

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Gann’s Method

Current Price and Past Time

Chapter 3 Current Price And Past Time 3.1 Introduction: In the earlier two chapters we have discussed the price squaring action. Now from this chapter onwards we will discuss the price and time squaring actions. Price and time squares with each other in five different ways. From chapter 3 to chapter 7 we will discuss one by one. Each chapter will tell you how to use these techniques. Always the price action is not a silent activity. For example if you consider SBI, on the 2nd week of August 07 it made high of Rs1700/- plus and in the following week it touches a low of Rs1400 / - plus. In the month of September 07 when it is trading at Rs1600/- plus, what kind of decision I shall take? This decision process will be discussed in this chapter using Gann’s square of nine principles. 39

Current Price and Past Time

Gann’s Method

3.2 Squaring current price with past time In chapter-2, I have explained how to convert the price to degree. In this chapter I will give a relation between time and degree. Go back to your elementary mathematics, years back when you were in your upper primary standard your teacher would have taught you a relation that is 1 degree is 4 minutes. If you will convert your number of trading days into the degree format then you need to convert it to hour then minute format. Once it is converted to degree you need to divide it by 360 to find out the number of rotations you have taken from one price change to other price change. Example 1:SBI 8 th August high was 1734.8, 23rd August low was Rs 1407/- and current price is Rs1610/- on 4th September. What will be my decision based on 40

Gann’s Method

Current Price and Past Time

price time relation? From high to low it has taken 11 trading days and 16 calendar days. This is, 24 X 11 X 60 = 15840 minutes. If you divide it by 4 then it will be 3960 degrees. One circle rotation is 360 degree. These 11 rotations will complete 3960 degrees. This I have explained to understand the degree and time relation. But this calculation will always result the number of days as the minutes can be represented as days. So straight way you can take the number of days. Once it is converted to the number of rotations we will treat the days as a mere number nothing other than that. Convert that number to degree using MOD function as discussed in the chapter 2. The number 11 is 12 degree. Its 0, 45, 90,180 and 270 degree offsets are 12, 57,102,192,282. Converting 16 calendar days to degrees we get 135 degrees. 41

Gann’s Method

Current Price and Past Time

Now convert the low 1407 to degree which is 47 degree. The 0, 90,180, 270 degree of set of the price are 47,137,257, 317. From this I conclude the 16 calendar days is squaring with the low 1407 at 90 degree offset i.e. 47+90=137, which is two degree more as compared to the calender days (degree conversion) . Now the Gann square prices will be 90 degree addition starting from 137 and time scale will be 16 period counts starting from 23rd August. Angles up from 47 137 257 317 407 497 587

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Angle factors 0.761 1.428 1.761 2.261 2.761 3.261

1465 1516 1542 1582 1622 1662

Gann’s Method

Current Price and Past Time

The point at which the current price squares with the time, the current trend ends there. In our case the price 1465 squares with the time 16 calendar days. This is a confirmation signal that the down trend ends once the price crosses 1465. After this cross over if the upward march is continuing the script will take next 16 trading sessions to touch its all time high to complete one cycle of harmonic motion. The price square is completed on the day following the 23rd August low. On 12 days from the 24th August the script is at Rs 1610 /-. Hence the price is in between 407 and 497 (4th and 5th row in the table). Therefore buying is advisable here by keeping the stop loss at 1582 and target 1662 to 1740 in next 4 calendar days. Though many books have told about how price in current trend squares with the time in prior trend but they do not explain 43

Current Price and Past Time

Gann’s Method

which price will be considered as a change of trend indicator. Very precisely Gann has specified that when price and time will square the pre-existing trend will die and new trend will start. In our example of SBI the down trend will end when the price cross above 1465. How much time it will take to cross this price? The price Rs 1465/- is almost in the 15 % retracement from the high Rs1734.8. The 15% retracement of 16 calendar days is 2.4 days, round it to 2 days. So we conclude that by using Gann price in current trend with time in prior trend if the stock moves above 1465 in next two calendar days then this should be taken as a time and price squaring action. 44

Current Price and Past Time

Gann’s Method

This price will be considered as the strong support for the forthcoming trend. If this cycle continues then the stock will touch its high in the coming 14 days. This does not hold good always. If neither the trading days nor the calendar days in the prior trend square with the price in current trend then you need to drop this method and see for other methods discussed in other chapters. So far we have been talking about the price, time and the trend but not about volume. In many Gann studies I did not find the importance of volume. May be the reason would be Gann was a commodity trader and given more importance to price, time and trend. Through regular mind bugging exercises to establish a perfect correlation of volume with the Gann’s method, I found out when the squaring of price and time happens with 45

Current Price and Past Time

Gann’s Method

rise in 10 days average trading volume the prediction comes true or else it is just a false signal. For better practice of this method just have a look in 10 days average trading volume before entering a trade. If price action supports the volume then go ahead with this technique, it will yield the best result. 3.3 Conclusion: To use this technique following steps are given. Step-1: Identify the high –low or low – high or high- high or low-low of a prior trend. Step-2: Convert the low or high to degrees. Step 3: Compute the +45, +90, +180, +270 and -45,-90,-180,-270 degree offsets of 46

Gann’s Method

Current Price and Past Time

converted price degree. Step 4: Count the number of calendar days and number of trading days between this high –low or low –high or high- high or low-low of the prior trend. Step 5: Convert days to degrees. Step 6: The price offsets degree which coincides with the time degree called the ‘price time square’. Step 7: Convert that price offsets degree and its higher order degrees to price using degree factors. Step 8: Take the current market price and compare with the computed price and the elapsed days to take a trade decision. It will not even take more than 2 to 3 minutes to decide upon a trade by using this method 47

Gann’s Method

Current Price and Past Time

These 8 steps can be put on an excel sheet and just do the job in one click of mouse. It will not even take more than 2 to 3 minutes to decide upon a trade by using this method.

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Gann’s Method

Price Range and Time

Chapter 4

Price Range and Time 4.1 Introduction 4.2 Number to degree conversion table 4.3 Squaring price range and Time 4.4 Conclusion

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Gann’s Method

Price Range and Time

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Gann’s Method

Price Range and Time

Chapter 4 Price Range and Time 4.1 Introduction: In the previous chapter we have discussed about current price and previous time squaring action. In this chapter we are going to discuss about how the price range in the prior trend squares with the time in the prior trend. If you happen to know the Fibonacci Retracement Technique, this is one more way of retracement technique by taking static point increment and decrement. In this chapter I will discuss few interesting intraday techniques for serious traders. Just take a print out copy of ‘the number to degree conversion table’ and keep it on your table. With the help of a pencil you can be able to take a trade decision by using this technique. 51

Gann’s Method

Price Range and Time

4.2 Number to degree conversion table: Number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

Deg Number 315 32 30 33 87 34 135 35 177 36 216 37 251 38 284 39 315 40 344 41 12 42 39 43 64 44 88 45 112 46 135 47 157 48 179 49 200 50 220 51 240 52 259 53 278 54 297 55 315 56 333 57 350 58 7.5 59 24 60 41 61 57 62

Number Degree Conversion table Deg Number Deg Number Deg Number 73 63 124 94 80.2 125 89 64 135 95 89.4 126 105 65 146 96 98.6 127 120 66 157 97 108 128 135 67 168 98 117 129 150 68 179 99 126 130 165 69 190 100 135 131 179 70 201 101 144 132 193 71 212 102 153 133 208 72 222 103 162 134 222 73 233 104 171 135 235 74 243 105 179 136 249 75 254 106 188 137 262 76 264 107 197 138 276 77 274 108 206 139 289 78 285 109 214 140 302 79 295 110 223 141 315 80 305 111 231 142 328 81 315 112 240 143 340 82 325 113 248 144 353 83 335 114 257 145 5.4 84 345 115 265 146 18 85 355 116 274 147 30 86 4.25 117 282 148 42 87 13.9 118 290 149 54 88 23.5 119 299 150 66 89 33.1 120 307 151 78 90 42.6 121 315 152 89 91 52.1 122 323 153 101 92 61.5 123 331 154 112 93 70.9 124 339 155

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Deg 347 355 3.5 11 19 27 35 43 51 59 66 74 82 90 97 105 112 120 127 135 142 150 157 165 172 180 187 194 201 209 216

Gann’s Method

Price Range and Time

If you happen to observe the number degree conversion table then see number 1, 9, 25, 49 squares with each other since all of them are 315 degree. 4.3 Squaring price range and Time : You can find the price range from close to close, high to low, low to high in a particular time range. Convert the price range to degree and compute its offset. Take the total trading days and calendar days in that price range. Then from the table find out its degree equivalent. The price offset which coincides with the time offset is considered as the squaring points. Trade decision will be taken at this point. This mathematical thing looks very simple but in reality these are bit difficult to take one uniform trade decision. 53

Gann’s Method

Price Range and Time

What makes me to rely on these methods? While following the retracement techniques I have limitations for static point retracement ratio. Though this is also a static point technique but I have the freedom to make it dynamic. See the next example to know the importance of this technique. Example 1: On 5th September 07 Nifty touched intraday high of 4503 at 10 a.m. and touched low of 4464 at 11.50 a.m. Based on the price in current trend to the time in prior trend suggest what type of trade decision I should take ? Below the intraday chart is given for reference.

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Gann’s Method

Price Range and Time

From the above data I have understood that from high to low I have travelled 4503-4464 = 39 points and it took 1 hour and 50 minutes for me which is almost 110 minutes. Taking 5 units as one unit we get 22 units of time. The conclusion is for 39 units of price change we take 22 time units.Converting the 39 and 22 to degree format we get 179 and 259 degree which never squares with each other. 55

Gann’s Method

Price Range and Time

Now use the dynamic approach in time, by reducing the time units by one and converting into degrees or finding the numbers which squares with 39 from the number to degree conversion table given above. We found 18, 39, 68 time unit squares with price range. 18 is 4 time units less from 22 time units and it will be an ideal choice for this job rather than 39 and 68 units. Now the price range 39 squares with 18 time unit at angle 179. Round it to 180. Hence my new range will be N(R) = ( 39+1)2 = 52.49 N (R) = Price range of square to end. In the next move in 18 time units if I will move 52.49 points in price line then I will complete a square. 56

Gann’s Method

Price Range and Time

Dividing 52.49 with 18 we got 2.91. Hence in each time unit I need to move 2.91 (round it to 3) point in price to complete the square and in this journey these prices will act as a resistance for me. Price squares time Unit 1 resistance Unit 2 resistance Unit 3 resistance Unit 4 resistance Unit 5 resistance Unit 6 resistance Unit 7 resistance Unit 8 resistance Unit 9 resistance Unit 10 resistance Unit 11 resistance Unit 12 resistance Unit 13 resistance Unit 14 resistance Unit 15 resistance Unit 16 resistance Unit 17 resistance Unit 18 resistance

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Resistance 4466.916 4469.832 4472.748 4475.664 4478.581 4481.497 4484.413 4487.329 4490.245 4493.161 4496.077 4498.993 4501.909 4504.826 4507.742 4510.658 4513.574 4516.49

Time 11.55 a.m. 12 p.m. 12.05 p.m. 12.10 p.m. 12.15 p.m. 12.20 p.m. 12.25 p.m. 12.30 p.m. 12.35 p.m. 12.40p.m. 12.45p.m. 12.50p.m. 12.55p.m. 1p.m. 1.05p.m. 1.10p.m. 1.15p.m. 1.20p.m.

Gann’s Method

Price Range and Time

This square will not complete until and unless 4516 level is not crossed. If you see the chart in the subsequent time period nifty will find resistances in those prices. White paper proof: At 11.55 a.m. from 4471 Nifty fell to 4469 At 12.05 p.m. from 4475 Nifty fell to 4471 At 12.11 p.m. from 4478 Nifty fell to 4472 Though the time and price are not matching because of the adjustments we made in time but the resistance prices are matching perfectly in 5 min chart. If you will get an exact match of time and price square, the time factor also works out precisely. What is the trade decision? The price squares with time in 180 degree and hence 180, 360,540,720 are the angles of interest. The factors will be 1,2,3,4. One should buy on 4516 cross over which is factor 1 price. 58

Gann’s Method

Price Range and Time

Target will be 4532 which is factor 2 price. Stop loss will be 4464 which is 0 degree from the 180 degree price 4516. This will be valid for that day. This is very much useful for intraday. Based on these levels and applying our own intelligence you can take any number of trade decisions. Gann specifies each price as an ‘energy packet’. If it crosses one price time square, the energy completes one circle and has the tendency to cross the next circle. In this theme ‘Elliot wave theory’ was also defined. This above technique is not been defined by any Gann expert till date. This theory only is interpreted by many Gann experts time and again. Fact is Gann experts always treat this method as a static method not a dynamic one. The way I have adjusted the time same 59

Gann’s Method

Price Range and Time

way you can adjust the price range with the elapsed time and derive one more set of resistance and support. In wave principle, cross over of one resistance level act as a support for the next resistance. Three consecutive support breaks should be considered as an exit point. Three consecutive resistance break out should be considered as a point of entry. This principle you should follow if you want to enter the trade inside the square. Example 2: Below mentioned table contains one week data of SBI based on price in current trend with time in prior trend.Analyse what will be the most probable forecasted price ? Date Open 30-07-2007 1524.45 31-07-2007 1622 01-08-2007 1610 02-08-2007 1550 03-08-2007 1620

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High Low Close 1614.8 1509.8 1578.05 1635.6 1540.05 1623.85 1610 1540.2 1548.05 1626 1544 1592.8 1652.4 1610 1635.75

Gann’s Method

Price Range and Time

In the week starting 30th July 07 to 03rd august 07, the script made high Rs1652.4 and low Rs1509.8. Hence the range is Rs142.60 Round it to Rs142/-. The time is 5 trading days and 5 calendar days. Converting it to degree; number 5 is 177 degree and number 142 is 120 degree. The price squares the time in +60 degree offset. That is 120+60= 180 just 3 degree more from the time degree conversion, this is an acceptable error. Hence 177,237,297,357 are the angles where the price will square with time. But we require only one value that is 177. For mathematical simplicity take it as 180 degree. Hence the price range for squaring is ( 142 + 1)2 =166.83. Round it to 166. If the price moves Rs166/- in 5 time units then it will complete this upward journey. 61

Gann’s Method

Price Range and Time

But in our case two week-ends are falling from the last trading day 3rd August to 6th August. Hence take the time unit as 7 instead of 5. Hence the price unit 166 will be divided by 7 to produce one unit change in price with time. That is 166/7= 23.71. In price term 1652.4+166=1818.4, is the price at which this up trend will end in coming 7 calendar days. During this period it will find resistances as given in the following table. Price squares time Resistance Time Unit 1 resistance 1652.4+23.71=1676.11 6th august 07. Unit 2 resistance 1676.11+23.71=1699.82 7th august 07 Unit 3 resistance Unit 4 resistance

1699.82+23.71=1723.53 8th august 07 1723.53+23.71=1747.24 9th august 07

Below mentioned is the OHLC of SBI from 6th August 07 to 10th August 07. 62

Gann’s Method

Price Range and Time

Date

open

high

low

close

6 aug 07

th

1610

1699

1580

1681.9

th

1690

1725.9 1672.55

1682.1

th

1700

1734.8

th

1727

1728

7 aug 07 8 aug 07 9 aug 07 th

10 aug 07 1601.55 1614.95

1698 1706.85 1641

1650.6

1575.2 1606.95

The unit 2 resistance is coinciding with the 6th August high. 7th August high coincides with unit 3 resistance. Why this time is advanced by 1 day? The exact cause of this is still beyond my understanding. But I see all months having 31 days exhibit such action. What will be my trade decision? The squaring of current price with time in prior trend is far from the current market price. 63

Gann’s Method

Price Range and Time

It is advisable to do the trade inside the square. Cross over of one resistance level should be taken as entry point, bearing target at the next resistance level and stop loss at one step below the entry level. In many cases the price range will not square with the time in the prior trend. But nothing to worry because we have other 3 methods to trap the price time action. 4.4 Conclusion: To use this technique Step-1: Identify the high to low or low to high of a prior trend. Step-2: Find out the price range. Step-3: Convert the price range to degree. 64

Gann’s Method

Price Range and Time

Step-4: Compute the +45, +90, +180, +270 and -45,-90,-180,-270 or 60 degree and its multiples or 90 degree and its multiples offsets degrees. Step 5: Count the number of calendar days and number of trading days between this high to low or low to high of the prior trend. Step 6: Convert days to degree. Step 7: The price offsets degree which coincides with the time degree is called the price time square. Step 8: Convert that price time square and its higher order degrees to price using degree factors. Step 9: Take the current market price and compare it with the computed price and the elapsed days to take a trade decision. 65

Gann’s Method

Price Range and Time

These 9 steps can be put on an excel sheet and you can do the job in one click of mouse. It will not even take more than 2 to 3 minutes to decide upon a trade by using this method.

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Price Range and Time in Current Trend

Chapter 5

Price Range and Time in Current Trend 5.1 Introduction 5.2 Squaring the price range of prior trend with time in present trend 5.3 Extreme price and time in current trend 5.4 Squaring price and time in current trend

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Gann’s Method

Price Range and Time in Current Trend

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Gann’s Method

Price Range and Time in Current Trend

Chapter 5 Price Range And Time In Current Trend 5.1 Introduction: In chapter-4 we have discussed how the price range in prior trend squares with the time in prior trend. In this section we are going to discuss how the price range in prior trend squares with the time in the current trend. In earlier chapter we used to compute the price range, the time elapsed in that price range and based on this we used to compute the future price resistance and support. Thing will be more realistic and live if we will be able to time the trend in advance. This chapter will teach you this wonderful technique of Gann to predict the time in advance.

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Gann’s Method

Price Range and Time in Current Trend

If someone asks you SBI has fallen from its high 1734 to 1407 in 15 trading days, Advise me how many days from this low of 1407 it will take to touch 1650, then you may not be in a position to answer this . This is a question Gann faced time and again and he has solved it in a more precise way. It is not a miracle. It is not astrology. It is the power of number. Each number is hiding the mystery of his future number. Many Gann experts understood his formula in a right way, but failed to apply in real life example. This Chapter is having all the essence to answer the above puzzle in scientific manner. 5.2 Squaring the price range of prior trend with time in present trend. In previous chapter we have learnt the conversion technique to convert the 70

Gann’s Method

Price Range and Time in Current Trend

numbers to degree. We also learnt the square root theory to convert the degree to number by using the degree factor.In this chapter we will learn a new formula to convert degree to number which squares with the original number. I feel after learning this formula all your purpose is solved. Numbers falling on particular angle: ((2 X N) + ((2 X A)/360) +1.25) 2 N is the number of rotations you want in a spiral. It starts with 1. A is the angle of your choice. 1.25 is a standard constant for square. The proof of this formula lies in your 7th standard mathematics. 71

Gann’s Method

Price Range and Time in Current Trend

Example 1: You are being provided with Tata Steel past 2 weeks open-high-lowclose data. Considering the one week data as prior trend and 2nd week time as current trend predict what will happen in the following days? Date 25-Jun-07 26-Jun-07 27-Jun-07 28-Jun-07 29-Jun-07 02-Jul-07 03-Jul-07 04-Jul-07 05-Jul-07 06-Jul-07

Open 599.75 599 602 592 592 597.4 594 603 620.55 628.65

High Low 603.75 593.2 610.85 597.7 603.45 588.8 599.45 588.1 601.8 591.35 608.7 592.2 605.8 591 618.8 599 630 614.5 635.5 621

Close 600.15 604.15 592.65 593.5 597.4 593.45 600.75 616.35 628.1 623.3

The high to low price range in the previous two weeks is 635.5-591= 44.5 .Round it to 44. In degree terms it is 249 degree. In the first week the script moves from low to high. Time elapsed from 1st week high to end of 2nd week is 5 trading days and 7 calendar days. The degree equivalent of 5 and 7 are 177 and 251. The price range squares with the time in calendar days in 3 72

Gann’s Method

Price Range and Time in Current Trend

degree off set. This is an acceptable error. Now our job is to predict the time and price action for the future week. The number of calendar days which squares with the time in this up trend based on the formula (given in page 71) is 21, 44, and 74. In the coming 21 calendar days from 6th July 07 the price trend is going to change. If it does not change then the same trend will continue for another 23 days (i.e. 44-21) from there. What will be the price for this termination points? Converting 21 days to degree we get 240 degrees. The 240 degree is 1.33 in factor terms. Using the square root theory taking the highest value 635.5 as the initial point we have: ( 635.5+1.33)2 = 723.5 73

Gann’s Method

Price Range and Time in Current Trend

723.5 is the 1st termination point for this uptrend. During this journey of 21 calendar days the price range will be 723.5 – 635.5 = 87.5 It will find the resistance at various points given in the following table. In one time unit the range is 4.16 i.e. 87.5/21.Adding this price to the Rs 635.5 the consecutive 21 resistance points are as follows. RS1 RS2 RS3 RS4 RS5 RS6 RS7 RS8 RS9 RS10 RS11 RS12 RS13 RS14 RS15 RS16 RS17 RS18 RS19 RS20 RS21

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640 644 648 652 656 661 665 669 673 677 681 685 690 694 698 702 706 710 715 719 723

Gann’s Method

Price Range and Time in Current Trend

Below mentioned is the 21 days price data of Tata Steel from 9th July to 31st July 07.

Date 09-07-2007 10-07-2007 11-07-2007 12-07-2007 13-07-2007 16-07-2007 17-07-2007 18-07-2007 19-07-2007 20-07-2007 23-07-2007 24-07-2007 25-07-2007 26-07-2007 27-07-2007 30-07-2007 31-07-2007

Open 627 629 630.1 662.1 672 699.7 694.1 682 686 684 712 723.4 720.5 712 695 655 646.9

High 632 638 661 674 699.5 712 702 691 692.9 720 726.6 732.4 725.7 717.9 697.2 675 659.8

Low 622.1 624.2 627 660 672 686 674.1 660.3 678.7 684 710 709 702.2 697 646.2 635 642.3

Close 626.5 634.1 655.5 672 695.8 694.8 681.1 682.8 682.5 715.2 721.1 721.8 709.4 703.7 651.6 643.5 656.3

If you observe this price data the termination of this uptrend happens 3 days in advance from the price range of 723 after the script made 4 consecutive attempts to close above 75

Gann’s Method

Price Range and Time in Current Trend

this level. Out of these 21 resistance levels 8th, 10th, 13th, 16th and 18th resistances are very important. That is the 0.382, 0.5, 0.618, 0.786, 0.888 level retracement of 21 days. From price data if we will observe the high then these prices has proved themselves as potential resistances. How to enter a trade? If the price range and time is very wide then it is better to enter a trade inside the square. To my idea entering a long trade above 38.2% resistance for target as the termination point will be the best choice. Same way if the trend changes signal and stock falls below 78.6% support zone after touching the termination price then it is advisable to initiate a short trade.

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Gann’s Method

Price Range and Time in Current Trend

5.3 Extreme price and time in current trend In this section we are going to discuss one more combination of price time squaring action. Gann’s method has not only the price time squaring but also geometrical angle transformations. We will discuss few more interesting things in the subsequent chapters. This method of Gann’s square exhibits how the ending price of one of the prior trend squares with the time in current trend. Example : On 4th January 07 Tata motor hit the high 988.4 and then fell to low of 712 on 07th March 07 . Using price in prior trend with time in current trend advice what kind of trade decision is advisable? Below mentioned is the price and time chart of Tata motor, given for reference.

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Gann’s Method

Price Range and Time in Current Trend

78

Gann’s Method

Price Range and Time in Current Trend

Total number of calendar days is 63 and the number of trading days is 41. Now the highest price from where the trend change happens in the prior trend is 988.4. Convert these three things to degrees using the formula discussed in the chapter 1, we get 988.4 is 34 degree, 63 calendar days are 124 degree, 41 trading days are 208 degree. Hence the price in prior trend squares with the calendar days’ time in 90 degree offset, since 34+90=124. Now using the degree to number conversion formula as discussed in this chapter For N = 1, number of days which will square with the 63 calendar days is 15. For N = 2, number of days which will square with the 63 calendar days is 35. For N = 3, number of days which will square with the 63 calendar days is 63. For N= 4, number of days which will square with the 63 calendar days is 98. 79

Gann’s Method

Price Range and Time in Current Trend

Your count will start from 7th March. From 7th March 07, the 15th, 35th, 63rd and 98th calendar days we will see major trend change in this counter. As per the calculation 21st March, 10th April, 8th May and 12th June are the days of major trend change in this counter. Price action 124 degree is equivalent to 0.69 in factor terms. Hence price from 712 in this factor will act as the resistances from this price. But in this case the calculation will differ a bit. Using the square root theory The 1st level of resistance will be ( 712 + 0.69)2 =749. 1st level of support corresponding to 1st level of resistance is ( 712 - 0.69)2 = 675 2nd level of support corresponding to 1st level of resistance is ( 675 - 0.69)2 = 639 80

Gann’s Method

Price Range and Time in Current Trend

3rd level of support corresponding to 1st level of resistance is ( 639 - 0.69)2 = 605 4th level of support corresponding to 1st level of resistance is ( 605 - 0.69)2 = 572 2nd level of resistance will be ( 749 + 0.69)2 =787. 1st level of support corresponding to 2nd level of resistance is ( 749 - 0.69)2 = 711 3rd level of resistance will be ( 787 + 0.69)2 =826. 1st level of support corresponding to 3rd level of resistance is ( 787 - 0.69)2 = 749. If you will relate this price data with the squaring time the 4 th period time data perfectly coincides with the 4 th period support. Exactly on 12th June 07 the script falls to 575 and close at 641. The question is 81

Gann’s Method

Price Range and Time in Current Trend

why this 4th period time 98 days give the accurate result but not other forecasted times. To explore this I have gone into the original writings of Gann. That I have given in this book as a separate chapter in chapter 6. Gann specified 3,5,7,9 and 12 are the master numbers. Out of which 7 is the most important, its square 49 also important, its second square 98 also important, and its third square 147 also important. Number 5 he considered as balancing number. Number 3 is in the list next to 7. From the computed days 15, 35, 63 and 98; 98 is the most important day since it is the 2nd square of 7. Hence we see a greater price action on that day. The number 15 and 35 is containing the balancing number 5 in its factor hence less price action 82

Gann’s Method

Price Range and Time in Current Trend

we have seen in these days. Number 63 also contains number 3 as a factor in its multiple 9x7. Hence we see less activity on that day. I made a small change in Gann’s method in this junction. Since the calendar days 63 squares with the price. I have factored it as 3x3x7 and taken the most powerful master number in that factor which is 7. Then 7 calendar days and its multiple 7,14,21 days act as my point of observation. I have taken those days from 7th March to observe the price change . I found 14th March, 21st March, 28th March 07 also act as the days when major price change happened. No need to break your head in this number game. Simplest way to apply this technique is; in price line on the specified day count if you are above the support point of its price then go long. If you are below the support point go short. 83

Gann’s Method

Price Range and Time in Current Trend

In our example on 21st March Tata motor opened at 772, touched high 778, low 760. This price is much above the 1st level of resistance and support. In this point going long in this counter is advisable with stop loss of 749 for target 787. This target is achieved in the next trading session. Same way taking a short call on 3rd level of resistance is advisable for target of 2nd level of support. Once one resistance is crossed convincingly it used to become a potential support point. Second most important thing is Gann has always specified that 3 consecutive rise or fall should be taken for identifying a trend. These two things we need to follow in all Gann’s techniques. 5.4 Squaring price and time in current trend: This is the technique for which you have been waiting for long time. We all the capital market players do not believe on past rather than present. 84

Gann’s Method

Price Range and Time in Current Trend

Gann’s method and tool is the only method which value only to present but not to the past. For example if some one asks you, SBI has fallen from 1734 to 1507 in a time frame of two weeks then what will be the next move in the SBI in coming days considering these two points are swing high and swing low. In what time frame it will hit what price in future? The answer of this amazing technique lies in this chapter. Example: SBI from its 4th December 06 high 1379 fell to 898.10 on 16th March, 2007. After touching this low it gave a swing reversal. What will be its next move in price in future time period? In terms of calendar days it is 103 calendar days (from 4th December to 16th March) and 69 trading days. The price range in that duration is 1379-898.10= 480.9. Round it to 480. 85

Gann’s Method

Price Range and Time in Current Trend

Converting this 480 to angle is 119 degree, 103 is 162 degree, and 69 is 190 degree. The 45 degree price offset is 119+45=164. This squares with 103 calendar days by 2 degree difference hence it is an acceptable error. Hence the days of my interest will be the days falling in the 162 degree angle. Using the formula ((2 X N) + ((2 X A)/ 360) +1.25) 2 Iteration 1: Considering N=1, angle 162 we get number of days 17. That is 1st April 07 (non trading day) Iteration 2: Considering N=2, angle 162 we get number of days 37. That is 21st April 07(non trading day) Iteration 3: Considering N=3, angle 162 we get number 86

Gann’s Method

Price Range and Time in Current Trend

of days 66. That is 20th May 07 (non trading day) Iteration 4: Considering N=4, angle 162 we get number of days 103. 26th June 07 (non trading day) Iteration 5: Considering N=5, angle 162 we get number of days147. 9th August 07 touches high 1728. Hence we conclude that the stock will take the 147 calendar days from the low 898 to touch the new high of the current swing. What will be the price at that time? The price will be the summation of the mid point of swing low and swing high and the new price range will be based on 162 degree factor. (1379+898)/2 =Rs1139/-. 87

Gann’s Method

Price Range and Time in Current Trend

The factor equivalent to 162 degree is 0.90. Applying the square root theory the price range is ( 480 +0.90)2 = 520. Target price of the current swing will be 1139+520= Rs1659/Some amount of ambiguity lies in this method. Since the swing we have taken for computation is a static one and long enough for the stock analysis we will discuss one more example based on this to clarify the action. Example 2: Take the case of nifty intraday on 7th September it made swing high of 4544 at 13:02 p.m. and swing low 4518 at 13:43 p.m. Explain how the price and time in current trend affect the future movement. The price change is 26 points in 41 minutes. Taking 5 minute as one trading session and 1 min as 1 calendar session we have 41 88

Gann’s Method

Price Range and Time in Current Trend

calendar sessions and 8 trading sessions. Number 8 is 284 degree, number 26 is 333 degree, and number 41 is 208 degrees. Hence the price squares the trading time in 45 degree offset. That is 333-45=288 just 4 degrees more from the 284. Hence the trend change time is 23 time unit from 13:43 p.m. This is roughly at 15:34p.m. Since we have closing at 15:30 p.m, we will see the price change towards the end of the session. What will be the price action? (4544+4518)/2 = 4531 is the initial level of resistance. 4531+44= 4575 is the next level of resistance. 4531-44=4487 is the support for 1st level of resistance. For 2nd level of resistance 4531 is the support. 89

Gann’s Method

Price Range and Time in Current Trend

This support or resistance of 4531 is supposed to hit in the mid way of 23 time units that is by 14:35 p.m. time (23 time unit is divided by 2 followed by multiplication with 5 to give the time in minute .That many minute from 13:43 p.m is 14:35 p.m.). How to initiate a trade? Always initiate a trade in the cross over of the initial level of resistance for the target of second level of resistance. Keep the stop loss below the 1st level of support. More realistic view of Gann’s method we will explore in the chapter 7.

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