HARNESSING EXPLOSIVE MOVES USING GANN JEFF GREENBLATT MTA WEBINAR MARCH 30, 2011
TECHNICAL ANALYSIS • Is Pattern recognition • Traders lose money because they are emotional • They get emotional because they don’t understand the pattern • Understand the pattern=greater opportunities • Dick Arms: all fear and greed in pattern
COMMON FIBONACCI RETRACEMENTS • • • • • • •
Once the domain of elite traders Now popularized by media outlets Its good for them but….. Once the crowd learns it No longer cutting edge So that is only our foundation We go way beyond Fibonacci
What We Will Cover Today • • • • • • • • •
Pattern recognition Cycles and symmetry Price and time ratio squares Percentage change readings Median lines (pitchforks) Support and resistance Range squaring time Relevant current situations How to profit from this data (catching turns)
CYCLES ARE LEADING INDICATORS • Time dimension missing X factor to most people • Can be anticipated in advance • Eliminates need for lagging indicators • In my work 262 week pivot at bull top was anticipated 6 months in advance as ‘MOST IMPORTANT PIVOT OF DECADE’
DOW 262 WEEK BULL MARKET Pivot was anticipated 6 months in advance
COMMON FIBONACCI FORMATION • A is .60 of the whole correction/first summer 2007 bounce (DOW TOP)
SAME SEQUENCE This time according to calendar days
TAKING IT ONE STEP BEYOND • Calendar day cycles-90 days (RUT-Dow top) • Time retracement- 55.5 (calendar days)up = .616% • Clusters with Dow all time high at 262 weeks • These calculations are the underlying structure • Always dig one level deeper
MOST IMPORTANT RULE:
WHEN PRICE AND TIME SQUARE THE TREND CHANGES DIRECTION
MOST IMPORTANT INTERNAL READINGS • Price and time square to get a ratio • Ratio dictates when we are close or at a turn • Cluster from various pivots • Percentage change readings important part of equation
NUMBERS ARE LANGUAGE OF MARKETS • Fibonacci – 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987 etc. • Lucas – 7, 11, 18, 29, 47, 76, 123, 199, 322, 521, 843 etc. • Golden spiral, sq roots – .618, 1.618, 2.618, 4.23, 6.84, .382, .786, 1.12, 1.27, 2.05, .236 • Important Gann 45, 90, 180, 270, 360
MORE IMPORTANT NUMBERS • Geometric/Gann - 22.5, 67.5, 135, 225 • 315 • Sacred Geometry – 1.414, 2.236, 1.90, 1.1755, 3.14 • Multiples of 144 – 288, 432, 576, 720 etc. • Astronomic 88, 182, 188, 241, 365, 414, 615, 687
WHAT TO DO WITH THESE NUMBERS • Divide number of points into number of bars • Ratio is the squaring of price and time • Most pivots have some combination of these ratios • Feel free to move decimal point • Percentage change low to high or high to low • Important application of Fibonacci #’s
STUDY OF BEAR BOTTOM • Best percentage change readings I’ve ever seen • Russell was Gold standard • Was only part of the story • Cycles and symmetry goes back 21 years • Importance to understand strength of the bottom pivot
KEY DAILY READINGS • Cluster of price and time=1.23 sq and 60%
PERCENTAGE % AT BOTTOM • Perfect symmetry from 3 pivots
DOW 87 CRASH RANGE • Range is 1108 points
NDX BOTTOM SQUARES DOW RANGE • 1108 weeks; take note of parallels
INTRADAY TRADING • Price and time squares • Best situations cluster with support/resistance • Support/resistance could be retracement • Always be aware of larger daily cycles • Percentage change less important on intraday charting
MOST BASIC SQUARE • Numbers of bars ratio to points (5 min) • 1-1 relationships are powerful setups
GANN GEOMETRIC ON 15 MIN • 10 pts/55.5 bars completes .180 square
MORE NUMBERS=MORE OPPORTUNITIES • I’ve always taught to look for Fibonacci/Lucas cycle symmetries • When combining price/time we open up understanding to greater possibilities/profit opportunities with almost ANY SET OF NUMBERS • Fibonacci/Lucas numbers are part of a greater overall ratio
TESTS OF FIBONACCI RETRACEMENTS • How do you trust a retracement? • Give it a great square reading
NEXT SEQUENCE • Test of support (blue line) .260 reading
INTRADAY EXTENSION • 2.618 extension last leg down/confirms with .359 reading
PRICE POINT MAGNETS • Action attracted to 610/618 price points
KEY PRICE/TIME SQUARE • 360 bars off low @ .0061 pts per hour
KEY POINTS TO REMEMBER • These readings are the underlying structure of all markets • They are leading indicators as we no longer need RSI/Stochastic/MACD, etc. • We always wait for change of direction (no front running) • 3 components before trading (support/resistance + square reading) • And candlestick formation
BE CREATIVE • Nat Gas turned at .429 pts per day in 429cd
THE CALCULATIONS • • • • • • •
Based on continuation chart at the time High was 15.517/low at 2.409 There was 305 td/429cd 15.517-2.409 = 13.108 13.108/305 = .0429 Bottom was on 429th calendar day Don’t forget 61 weeks
NEXT TRADING SEQUENCE • Topped on a .0619 daily square
MAJOR 2010 SUGAR TURN • Nothing rare about 318 days up
UNLESS ITS UP 317 WEEKS • Cluster of 318 days/317 weeks caused turn
XAU HIGH @ 608TD
GOLD CASH TO 99 BOTTOM July/Aug double bottom
TEXTBOOK SQUARE • POT topped at 121.36 in 121 days
2009 BOTTOM IN CORN • Price 302 in 302 trading days/262 from secondary pivot/383pts=1.46sq
CORN PRICE/TIME SQUARE • Price point 302 in 302 days=RALLY
GREAT DEPRESSION PRICE/TIME SQUARE • 2.326 and 89% drop makes this method timeless
INITIAL LEG OFF 80 SILVER TOP • 3956/88d=44.95sq @ 78.55% (Month continuation)
SAME CASE STUDY • 78.5/90%/127wks/35.89sq
LARGER DEGREE VIEW • Led to decade long low to early 90s
SUMMARY • Perfect price and time (Corn, Nat Gas and POT) rare but very important • Every leg has some combination of price and time • Markets spiral in all degrees of trend • We take snapshots of these points in time and look for opportunity • We use underlying structure to identify patterns
MEDIAN LINES • • • •
Help keep us grounded Give us a good visual on the trend Act as magnets to the price action When channel lines hit sentiment also changes
NOT VERY CLEAR • 5 min Dow Emini
IS THIS MORE CLEAR? • Median lines give us GPS to pattern
WHY DID DOLLAR TOP LAST YEAR? • AT BIG MID LINE
BKX BOTTOM TARGET • Parallel warning lines excellent tool
FLASH CRASH THURSDAY • NDX bottomed out at 2 pitchfork levels lower
PARALLELS ON BOTH ENDS • Caught oil top and bottom both ends
CONFLUENCE READINGS/PITCHFORKS • Readings tell us if lines will validate
WHEN CHANNEL AND READING HIT HEADLINE MATERIALIZED
SUPPORT AND RESISTANCE • Polarity where support becomes resistance • Resistance becomes support • Important supply and demand points • The ‘A’ wave tendency
FORMER SUPPORT BECOMES RESISTANCE
POLARITY CONTINUATION
‘A’ WAVE POLARITY
SMALLER ‘A’ WAVE
ADD PITCHFORK TO ‘A’ WAVE
GARDNER STUDY • Studied musical savants (1973) • Later found young children with access to elite training attained same levels as musical prodigies (1983) • Conclusion: Innate ‘gifts’ only potential for achievement
CHILD PRODIGIES • • • •
Never attain excellence as adults Studies according to Barlow (1952) Feldman (1986) and Scheinfeld (1939) Studies show most exceptional adult performers got instruction early and often
REQUIREMENTS • • • • •
Passion/motivation Time, equipment and training Access to money Yours or acquired funds Don’t give up
WHY STUDY UNDERLYING STRUCTURE? • Many traders have syndrome of win a few lose a few • Only way to win is understand why you win • Develop conviction with higher quality setups • Put yourself in a position to let winners run
GANN’S MOST IMPORTANT DISCOVERY • • • •
History repeats Past best predictor of future Squaring price/range and time Equal number of points balances equal number of periods • Adapt universal principle to present day applications
Modern Era Squares • Gann didn’t have to deal with multiple indices • Modern markets more complex • We must combine various indices to make this work • All indices related to each other in some fashion
APPLICATIONS • Catch important turning points in key indices • Buy and sell points in stocks • Leverage information in important sectors • Use in any market • Knowledge in one area allows us to anticipate moves in related markets
DOW 87 CRASH RANGE • Range is 1108 points
BKX SYMMETRY
AMGN SETUP • 6.55 range at 65 trading days
AMGN/BTK CONNECTION • AMGN Led whole sector up in Dec
RIMM CASE STUDY • Found trading low at 55.49 @ 55 days
RIMM NEXT SEQUENCE • High at 63.94 at 64 days
SYMMETRY ENDS CORRECTION • Drop ends at 6.46 after 64 sequence
DUSA PENNY STOCK • .42 correction in 41 days
SPECULATION GANN WINNER • Everyone wants a bio spec winner
CELGENE CASE STUDY • 60.90 in 61.5 days off high/ low at 64days (creative variation of concept)
BIG DOW AUTUMN RALLY
SPX LONG TERM CHANNEL
NIKKEI 233 CONDITION
TRAINING PROGRAM • Cover materials from today in greater detail (3 major components) • One on one attention from me • Email correspondence go at your own pace • Includes Gann square of 9 and • Normally $747, 1 week special at $697
ULTIMATE GUIDE TO PATTERN RECOGNITION ROUGH CUT • We only had time for several chapters • Adapted from the training program • For the individual who doesn’t want personal attention • Covers Andrews, Gann ratio, Gann calendar, range/price square, sq of 9, support/resistance, trading strategies and psychology
MORE INFORMATION • www.Lucaswaveinternational.com •
[email protected] •
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