First: the forms
In the eyes of Gann, the forms always reflect the study of
patterns of price movement, for example, the trend is bullish when the price
breaks the previous summits and is bearish when it breaks previous Bottoms, and trader can to obtain
this information from the movements of the market and the size of the move and
the time of the move, this reflects the price (move , size, time, duration) which
are associated with the form, in addition the trader can draw these models from chart through his
analysis of the forms and of well-known models .
Second: Price
In the eyes of Gann, the Price is the fluctuation of the
targets on the chart, as well as the angles and the percentages of those points
after the formation of the chart, the trader is the one who creates the price
information that will be used to predict peaks and bottoms, For example: if the
price moves of 100-150 points before formatting a summit later then predicting would be of the bottom next to the price moves
100-15 point also, and vice versa if the price went down 100-150 points from
the top, and then followed the summit again, trader can expect the price to fall 100-150 points, and also if
the market moves on the perceptions that the market is in this case balanced.
Third: Angels
The use of geometric angles is very important part of the wonderful
Gann tools and his ways, the market has always a form and main shape and the angels
have a very important role in the formation of the design or basic shape, and Gann
insisted to take specific patterns or specific sizes to each market (per stock
or currency) to maintain that relationship, so he chose a price range, which
was in agreement with the design or formula. It is based mainly on a 45 degree
angle to divide important map of price and time zones. This angle is usually
referred to as the corner "1X1", because it represents one unit of
price with one unit of time. He also used other geometric angles commensurate
with the price and time division. These angles defined 1X2 and 2X1 angles because
it represents one unit of price with two units of time and two units of price
with one unit of time, respectively.
And all of these angles are important because they indicate
support and resistance. It also has predictive value for this trend in the
future, and the activity and the direction of the price. All of which must be
known to the expectations of the market that can be in the future.
Fourth: The points and percentage ratios correction
Alongside Gann angles, he offered also for trader levels
moving with time, where the points are correct percentage in order to provide
points of supports and resistances, which remains constant as long as the
market is still in shortage price range, it is recognized that Gann has put
ratios of correcting the rule, which states that the prices of most of the correct
steps to 50%. Other divisions of 25% and 75%, with 50% of the level that occurs
in most cases.
Gann believes that traders would be successful if they used tools prices that determine those
ratios such as drawing lines between points, angles and proportions of the
patch to find support and resistance to the combination of the two (angles and
proportions of the patch) providing to the trader secretary tool to determine supports
and resistances that must be worked out.
For example, while there is an uptrend and by angel 1X1 of the
main bottom provides us with correct ratio of 50% area of support and
resistance on the chart, and that region is very strong and supplies trader
with support and resistance point, which is very strong he used it to trade.
Anniversaries
Gann accustomed on the use of anniversaries as an important
tool of his tools, and depends through
it on the historical periods that are important tops and bottoms market, and
this information group affect the seasonality of the market because usually
anniversaries recur in the future, for example: to anticipate tops and bottoms,
where Gann started to study Price returning to the twelfth century, referring not only to
the price, but the memory of dates - a summit to summit, from top to bottom,
bottom to bottom, and the bottom to the summit - and was the key factors in
this thinking. This information is drawn from the very important research in
the analysis, and these appointments give clear indications to the last of the
market-driven approach: the cycles of time.
Cycles of time
As we mentioned before, Gann tried to build analysis tools
that were in the exact design of the market. When he looked at the dates of the
anniversary he saw a series of courses for a period of one year. In engineering
terms, the cycle for a period of one year represents a circle of 360 degrees.
Based on the geometric relationship of the market, Gann also considered dividing
the year into four quarters to be important to the timing of those periods.
These divisions are the quarterly cycle of 90 days, and the 180-day session,
and the 270-day cycle. In use for a period of one year in the session and the
distribution of this session on his department, you will find even now a number
of these circles to the line (preferably three or more) at one point in time in
the future. There is so far as the number of cycles until the line called time
cluster. This time is the main group which is used to predict the tops and
bottoms. Cycles of time is a large part of the analysis to be predicted by Gann
for the future price, and should be accompanied by indicators of valid prices for
determining market expectations.
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