The New W. D. Gann Technical Review

Vol. 1, No. 8	June 5, 2002
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W.D. Gann's Square of Nine
-Part Two

In this issue of 'The New W. D. Gann Technical Review', we are going to examine the use of the Square of Nine in calculating price support and resistance.

Mr. Gann was clear in his instructions about where to expect this support and resistance to occur on the Square of Nine. If you are unclear about the angles that are important to price movement, please reread Vol. 1, No 7, which describes why the angles of 90, 180, and 360 degrees are so important.

These angles show up repeatedly in Mr. Gann's writings because they describe the geometry of the square (0, 90, 180, and 360 degrees) that can then be placed inside the circle (0 to 360 degrees). Thus the esoteric term of 'squaring the circle' becomes a reality.

By placing these angles on the natural squares chart from the center, one moves from one natural square to the next in 180 degrees. The midpoint between squares is reached in 90 degrees and the full circle or cycle of 360 degrees moves two full squares from its starting point.

This first example is December Wheat 2002.

The contract high of 319 is made early in the contract in January. In early May, the market makes the low of the contract to the date of this article at 283 ½.

The square root calculation for this movement is as follows.

This is easily seen on the Square of Nine by finding 319 just right of the angle moving up from the center to the 12:00 o'clock position. Then 180, degrees or directly across to the bottom left, is the bottom at 283 .

The next example is of the S&P Mini electronically traded contract. This contract is setting records every month in terms of volume of trades. It is the small version of the Standard and Poor's stock index.

The chart is continuous in that the four traded contract months (March, June, September, and December) are linked together when the volume in the new contract exceeds the old contract. In other words, the March contract is traded until early March when the volume in the June contract exceeds that of March.

The year to date high for 2002 is January 7th, at 1178.50. The intermediate low following that high came on February 20th, at 1073.75. The market then rallied to the double top area of 1177.5 on March 19th. From there the market made a lower swing low on May 7th at 1045.75.

Following the square root mathematical formulas gives us the follow calculations:

The next move back up to 1177.5 is obviously 270 degrees also.

This is easily seen on the Square of Nine locating 1178 on the right side just below an angle moving from the center to the 3:00 o'clock position. The first low at located by moving 270 degrees counterclockwise to 1074. The second low of 1045 is located adjacent to the 1177 and 1178 highs.

These examples are excellent exercises in the use of a different type of mathematics to explain market movements. There is nothing strange or unusual about these markets and they certainly represent some of the most highly traded market in the world. Thus one could conclude that many market movements can be understood if we just change the methods we use to calculate those movements.

In the next issue we will look at the stock market to see if Mr. Gann's writings and teachings about mathematical consistency holds true in the stock market as well.

ACKNOWLEDGEMENT:

The charts reproduced in this article were produced by Market Analyst II software.

DISCLAIMER:

Every effort has been made to ensure that the content and conclusions presented in The New W. D. Gann Technical Review are complete and accurate.

No part of The New W. D. Gann Technical Review contains trading advice - stated or implied, nor is an invitation to trade. The directors and associates of Lambert-Gann Educators, Inc. are NOT licensed trading or investment advisors. Lambert-Gann Educators, Inc. is an organization designed to assist traders and investors to become more knowledgeable and independent.

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