The New W. D. Gann Technical Review

Vol. 3, No. 2	April 21, 2004
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Gann Study

Ken Gerber

In Volume 3, No. 1, of ‘The New W. D. Gann Technical Review’, we reprinted one of Billy Jones’ newsletters concerning a unique mathematical property of markets that appears fairly regularly. This mathematical property concerns measuring a base-building period of a market in both time and price and multiplying those numbers by 7. Finally we project a future time and price for a trend change by adding the calculated time and price to the base-building period.

In the issue, we will show some examples of this mathematical property at work in some current markets.

The first chart is a current chart of continuous December Corn. Mr. Gann gave us specific instructions on how to create continuous charts. The data consists of December contracts linked together at the expiration of each December contract. In other words, the data is December 2003 corn from the expiration of December 2002 Corn until the expiration of December 2003. Then the data continues with December 2004 Corn.

This is a pretty straightforward example of how an accumulation period might be used as a forecasting technique.

The area marked on this chart is an accumulation period beginning with a gap and ending with a gap away. It began on November 4, 2003 and ended on November 25, 2003. The range during the accumulation was 14 cents.

21 calendar days times 7 = 147 calendar days

14 cents range times 7 = 98 cents projected range.

Adding 147 calendar days to the middle of the base period gives us a target date of April 9, 2004

Adding 98 cents to the high of the range of 244 = 342.

The high as of the date of this article is on April 8^th at 341.5. As you can see, the market has had the greatest pullback in price since the upmove began, giving us at least an indication that the trend has changed. 

The next chart is a current chart of continuous July wheat.

The first area marked with a box is the consolidation period from March 17 to May 6, 2003. The price high is 296.5 and the low is 279.

Thus we have a base of 50 calendar days and 17.5 cents price movement.

50 days times 7 = 350 calendar days.

17.5 cents times 7 = 122.5 cents projected range.

Adding 350 calendar days to the middle of the base time = April 11, 2004

Adding 122.5 cents to the high of the base of 296.5 = 419

The high of the current July wheat market is 430 on April 5.

The second box on the chart was interesting because it was another accumulation or base period covering 14 cents and 15 days.

15 days times 7 = 105 days which was not important.

14 cents times 7 = 98 cents, plus the top of the base at 333, = 431.  This was within one cent of the actual high that has occurred at this time.

It would be a logical conclusion that the market sometimes gives us more than one indication of where it is going.

Please remember that this technique is just an indication of mathematical forces in the market at work. Just as a carpenter cannot build a house with a hammer alone, we cannot forecast accurately without using all of the tools that Mr. Gann left us.

Once we have created an accurate forecast, we then must use all the trading tools we have in our toolbox. The combination of accurate forecasts and correct trading techniques is what teaches us how to duplicate Mr. Gann’s incredible trading records.

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.

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