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[start]                            [ 28 ]                                                              
occur. The loss of momentuffl is apparent, and again, a consolidation trading strategy could be used.
Anniversary dates from the previous years high in June, and two years ago (the low in July) are present. Support is being shown at the level of the old high, and price consolidates with an upward tilt into the anniversary of the previous years low in September. Price moves up and closes on the high this month, and it appears to be accelerating to the upside with higher lows for the last two months and a breakout above the old high.
Seeing this price action might make you exceptionally bullish, but the road map for the next year, year three of the decade calls for a bear year to start, and as this is an anniversary month, you would be cautious. If you were long, you would be uaing tight stops, and you might be looking for short positions. In October, price reverses down, and you are out of any long positions.
The road nriap works well in the decade of the teens, and it is one of the decades upon which Gann originated this plan. As I pointed out earlier, not all decades will exactly follow this plan. That is the reason that it should be used in a road map fashion. It is to be applied with an eye on the recent past, and the 5, 7, 10, 20, and 60 year cycles. It is a broad road map for the market in general, and as with all road maps, there may be a few "detours." I urge you to use the method above to examine the Dow Averages further and use the same road map for individual stocks. Doing this will help you see the value of an overall long term trading plan, and it will help you to understand how markets move through time.
A makeup of a trading plan for any year should be loosely defined within the parameters of the road map. You may find that in certain years, price has a different destination than that which the map indicated, however, the probabilities are there for the road map to be correct.
APPLYING THE CONCEPTS
Now that we have viewed the tools and the concepts, its time to put them together by studying past history. You have seen the effects of these in abstract, but together they act as filters against each other, and as emphasis to each other.
This chapter will require the most work on your part. I do not believe that you can properly trade with these methods without a considerable amount of work , and I do not expect that you will understand it well without that work. In this chapter you may discover ideas which are not mentioned earlier. You may understand concepts which were previously unclear to you. And if you find that you are willing to take the study of this chapter, and the charts especially, a step further, you may become as enthralled with these methods as I am.
In studying these charts, you must again remember that there are two types of resistance to a trend; price resistance and time resistance. Horizontal resistance, which is commonly referred to as price reeistance can be shown by drawing horizontal lines across the chart at that price level. Time resistance, can be shown by drawing vertical lines down from the top of the chart, ae is done with the divisions of a square in some examples. Also, there is price resistance or support given by the angles. The objective is to locate on the charts the zones of extreme price and time support or resistance, and as price and time move into thoee zones, we look for the tradable setup.
One of the major advantages to this type of approach is you can be prepared for the trade well in advance of the actual execution of it, rather than finding yourself reacting to the market or price movement emotionally. Being prepared or being able to anticipate a change in price trend is a great advantage, especially when considering the emotional capital expended in constantly reacting to the markets rather than anticipating and being prepared in advance to act. We can be our greatest enemies. If you can acquire the discipline to trade or put on positions only when time is right, according to the charts and setups, rather than attempting to buy and sell every movement, you will find this trading or investing profession quite profitable and enjoyable.
The system Gann recommended for finding trading opportunities was to first establish a time turning point (cycle), then confirm that probability on all series of charts, (monthly, weekly, daily) in very active markets hourly.
SQUARE OF NINE
The square of nine, or spiral chart of nine, is a very valuable tool for trading and forecasting. The accuracy of this tool will, at times, leave you wondering why you would ever need any other knowledge to trade successfully. Just keep in mind that hindsight makes for very easy trading. You must still have a basic understanding of price movement. Remember, this is the foundation of analysis and all else is built upon this knowledge. As you go through the examples in this chapter or any chapter you MUST cover
up the future price action with a piece of paper and move it so as to view the oharts, day by day, as if the exercises were in real time movement.
First, align the disk so zero is on the date of December 21st. The first thin red line moving to your right is 45 degrees from zero. In time that is 45 degrees of one year or approximately.,.,45 calendar days. date is February 4th. You will, also, notice a " zone,~this is a death zone which I will discuss further in this chapter. Moving out to the next angle is a red line which is 90 degrees, or one quarter of one year, or approximately 90 Calendar davs (on March 21st). Determining degrees of movement in price are found in the same manner. With zero still at December 21st, follow the dark red line up to the number 116. Moving to your right 45 degrees is 111, and 90 degrees is 106. Moving up in numbers, or to your left, 45 degrees up is 121 and 90 degrees up is 127-128. One hundred and thirty-five degreee up is 133 and 180 degrees up from 116 is 139. This could, aleo, be found mathematically. Find the square root of 116 or 10.77033 then add 1 and square that total which equals 139. To calculate 360 degrees, find the square root of 116, then add 2 and square it. This is 163, or 360 degrees, and on complete cycle in price.
Now lock at the angle running from the center of the square down to November 7th. Notice the numbers running along that angle are all odd squares of numbers, 9-25-49 etc. Moving in the opposite direction from center to the date of May 6th are the squares of even numbers. The angle 90 degrees away, or August 8th to February 4th, indicates 50 percent between those natural squares of numbers.
The major cycle is one year and its multiple outward and its geometric divisions inward. At important changes in trend the inward cycles of one year will terminate the multi-year cycles. For instance, a 90 calendar day cycle can term a 5 year cycle or a 10 year cycle. The cycles of the geometric divisions of one year
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