First: models
According to Gann, models always reflect the study of
patterns of price movement , For example the trend is bullish when price
penetrates the summits and will be bearish when it broke bottoms , so trader
can get this information from the movements of the market and the size of its
movements and time of the move, this reflects the price (move, size, time,
duration) which are associated with the pattern, in addition to that trader can
draw these patterns
from chart using
analysis of the well-known forms and models .
Second: Price
Gann considered the price is the fluctuation of the targets
on the chart, as well as the angles and percentage proportions of those points.
After forming the chart, the trader creates the price
information that will be used to predict tops and bottoms, For example: if the
price moves 100-150 points before the summit, then we predict that the price
will move from the bottom 100-150 point.
Conversely, if the price went down 100-150 points from the
top, and then followed by another top, the trader can expect the price to fall
100-150 points also. If the market moves on those perceptions, the market is in
this case a balanced.
Third: the angles
The use of angles is very important part of the amazing Gann
tools and methods, the market has always a basic design and shape , so angles have a
very important role in configure the basic shape or design, and insisted on
taking Gann-specific patterns or specific sizes to each market (per stock or
currency) to maintain that relationship, and therefore he choose price range
that has been in agreement with the geometric design or formula., It is depends
mainly on a 45 degree angle to split a significant map in prices and areas. This angle represents because they represent
X1 time and usually it is referred as Angle X1, one unit from the price with
one unit of the time. He also used other angles to suit with the price and time
division. This angle is defined as angle1X2 and it represents one unit of price
with two units of time. And all of these angles are important because they
indicate support and resistance. It also has the predictive value of this trend
in the future, and the activity and the direction of the price. And all are Things
must be known to the expectations of the market, which could be in the future.
Fourth: The points and percentage correction ratios
Beside Gann angles, Gann also gave the trader levels moving
with time, where are correction percentage points in order to provide supports
and resistances that remain fixed as
long as the market is still in shortage price range, it is recognized that Gann
had put ratios correct of the rule, which states that the prices of most of the
right steps to 50%. Other divisions, 25% and 75%, with 50% of the level that
occurs most often.
Gann believed that traders would be successful if they used tools prices which determine
those ratios such as drawing lines between points, angles, and correction ratios
to find the Support and resistance.so
the combination of the two (angles, and ratios correction)
provides a tool for trader to determine support and resistance that must be
worked out.
Annual dates:
Gann used to use annual dates as an important tool of his
tools, and depends where the historical periods in which there are important
tops and bottoms market,
This combination of information affect the seasonal of the
market because usually Annual dates
recur in the future.
Cycles of time:
As we mentioned earlier, Gann tried building analysis tools
that were in the design Specified for the market. When he looked at the annual
dates, he saw a series of courses for a period of one year. In geometric terms,
the cycle represents a circle for a period of one year Or 360 degrees, Based on
the geometric relationship to the market, Gann also divided the year into Four
quarters to be important to the timing of those periods. Each of those quarters
represents a cycle of 90-day, and a cycle of 180 days, and 270 days cycle. In
use
For a period of one year in the cycle and the distribution
of this cycle on the circle, where you will find a number of these cycles line
up (preferably three or more) at one point in The appropriate time in the
future. The number of cycles Called time cluster, this time is the main group
that Used to predict tops and bottoms. Cycles of time a large part of the
analysis of Gann
To predict the future price, and should be accompanied by valid
prices indicators that determining the Market expectations.
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