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This, obviously, is showing the 11th, as is the three day move mentioned above. On or about the 15th, we have a 90 calendar day count from bottom, with a drive up into it, and a 120 calendar day oount from the previous high, so, we know we have a natural cyclical turn. This is a high probability setup.

As I mentioned earlier, it is important that you recognize common ohart patterns. Look at the General Motors monthly chart. The head and ehoulders pattern, at the 1976 top, has a diatance in price from the head to the neckline, at 15. Thet gives an objective after a break of the neckline of 15 points down from the neckline at 64, or a prioe of 49. Edwards and MoGees book on

?eneral chart patterns ia excellent for this type of study and amiliarize yourself with normal market patterns. These patterns will ahow up on all charts- daily, weekly, and monthly. Obviously, the monthly patterns have the greatest significance, and the daily patterns, the least.

To find fifty percent of the range from the December, 1974 low to the high in December of 1976, follow the 45 degree angle up from the prioe level of the 1974 low from the same date as the high. When that angle crosses the 1X1 down from top, you have fifty percent of the range in price and in time. If you draw that line, you will see that price came down to that time and that price level, and proved support for a move up.

Gann called this angle up from the level of the previous low the "relative true trend line." He said that "once thia angle is broken, the trend has changed," and as with all of the etatements he made similar to this one, it only worke under the oircumetanoea that he applied in it. You will notice that the faetest move down in this atook results after that angle is broken. By itself, the breaking of that angle from the low prioe level and the date of the high, is a tough indication to trade from, I would rather stick with what ie simple and what I know worke.

The low hit, at fifty percent of the range is six months, or 1/2 year from the high in August of 1978, and twelve monthe from the low in February of 1978. Of course, we are at one-half of the range in time. This is a setup, not only from the 50/50 tup on the square of the range, but, aleo, from the oyole of years. Although it is not a great trade, it is a good one. Note, aleo, that the 2X1 up from zero met the price level during this same period, and provided some support.

Again, I want to emphasize something about the angles. When price is moving down below a 2X1 angle from the high, a strong close above that angle indicates that the down thruet is at leaet tefflporarily over, and you can look for long, side trades aupported by good evidence. This occurred in June, 1977, March, 1978, March, 1979, July, 1980, March, 1981, Maroh, 1982, July, 1984, and, November, 1985.

This chart has anglea from zero, and all swing highs and lows along with time counts from major highs and lows. Once you put all of the information on a chart, it appears confusing at first. As I stated earlier, the first time I aaw a Gann ohart, I thought



there were so many things going on, that something had to work. If you dont know the significance of the angles and counts, this chart will look very busy to you. On the other hand, if you do know those simple rules, such as price moving above a 2X1 angle, you will be able to judge good trading situations.

When the 1X1, or 45 degree angle up from the 1974 low is broken, price has just been at a triple lower top. That is a good indication of strong resistance at that point. Lower double and triple tops are important, and they are things that all traders look for. The same is true of bottoms. The third move against a resistance or support zone, if it holds that zone, it has a high probability of causing a fast move.

You will notice, from the high in December of 1976, price moves down in April of 1980, to the point of being at fifty percent of the high in both price and time. You might use a different method of entry here. However, I would buy when the price proved support on, the 2X1 angle up from the low made there, and would consider a high risk position based on the daily charts any time during that month- a good turning point from both price and time. I would assume a three month move up, and during the third month, I would be following the stock cloaely with my stop. There is some concern with this trade because, at the time of the setup, the 2X1 angle down from the September, 1979 high, is still above price. If price movee above that angle, decisively, I would be more comfortable in the long position.

In September of 1980, the 5th month of the drive up, time is 45 months from top, twelve months from a lower top, and against the resistance of the 1X2 angle down from the high whioh was exceeded by three points. Then, price gives an outside revereal down. Prioe has shown resistance here for three months, with tops three times within two points of each other. On a weekly chart, it will be apparent that this stock has lost its upside momentum. Price, then, drives down from the top month, and ror three months into a bottom that is 48 months from top and 72 months from the low.

This move down is a 90 day accelerated move, and would be apparent on your daily chart, as suoh. So, you would be looking for bottom on the 90th to 99th calendar day of the move in December of 1980. For timing to get out of a ehort position, or into a long one, you would take the last swing high on the daily chart- before that 90th calendar day- and draw a fast angle, a 2X1, or a 4X1 down. When price broke that angle between the 90th and 99th calendar day, that means the hard down move is over, and it is a good time to take out shorts, or put in a long position. Of course, price is approaching the fifty percent of the high support zone, and you would be asking youraelT, "double bottom?" The next high prioe in the stock comes in the month of April of 1981. This occurs after a three month move up, with price moving slightly higher in the fourth month, and you could conaider this a 120 day move, although, it is probably not exactly that. Time is exactly one year in months away from the low of April, 1980. This month of April is, also, the full square of the range from the 1979 low to



the 1976 high in time. Note that the full square of the range from the 1974 bottom to the 1976 top, came out in February, but that there was no confirmation in time, and that price was in the second month up from a bottom.

Often, if price sete up this wey, as it did in April, 1981, an exoellent trade will result. But, as you can see, you will not always get the results you hope for from any one trade. Always use intelligent stops.

After a bear trend in stock, if a bull trend is going to start, prioe is generally going to have some kind of a sideways move. That move may not always be apparent on a monthly chart, so you ehould use weekly oharts for comparison.

When the 2X1 angle down from the April, 1981 high is broken, the down move is temporarily over. That angle ia broken after the five year cycle from top ended in December of 1981, and a double bottom forms. Six montha after that double bottom, price breaks down and shows aupport on the 45 degree angle up from that low. It, then, reverees and oloaes high, for an outside reversal month up, taking out the 1X2 angle from top. This angle from top has been taken out before, so it is not a strong signal. However, the stock haa moved into a strong position from top, and is, obviously, in a strong position from bottom.

If a bull trend is etarting, this could easily be where it would start from. Prioe reverses down the next month- a month with a higher and higher low. The low of the next month is elightly broken in the next month, but price begins to move up, support is shown, and the fast angle up from bottom is recovered. If this is a bull trend, that fast angle up means a fast move, and the recovery of that angle is a good sign of strength. The breaking and recovery of angles on a daily ohart oan indicate a temporary overbought or oversold condition. On the weekly charts, and espeoially on the monthly charts, thia same action can be quite powerful.

Notice that I have drawn another 2X1 angle up from the low in August of 1982. Price, at that time, held the 45 degree angle from the low. This is a bull trend, and eaoh time that the 2X1 from the double bottom is broken, and recovered, an exceptional move up results until price is nearing a top. The second 2X1 up is not broken until the move up is over.

The strong move up lasts for one month less than a full year from the August, 1982 low, and at a full year from the low of February, 1982. It is one half of the equare of the range from the April, 1981 top to the February, 1982 bottom and equares out (as shown by the 2X1 angle up from low crossing the 58 prioe level). Time ie one year from bottom, and six monthe from where the fast move etarted on the 45 degree angle. A 90 calendar day move down is already in progress from the resistanoe at the level of the lower triple top in 1978 and 1979. At the end of this three move, or correction, which is the normal correction in a bull trend, price bottoms exactly on the 2X1 angle up from the August, 1982 start of the fast move. If the trend is to continue, this is an



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