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W.D. GAnn specialist Pak-chung Wong explains one of the most complicated technical tools and also one of the most powerful.
There were several legendary stories about W. D. Gann. One of the stories was about his forecast of the wheat market in 1909. According to Gann’s friend William Gilley, “One of the most astonishing calculations made by Mr. Gann was during last summer  when he predicted that September Wheat would sell at $1.20. This meant that it must touch that figure before the end of the month of September. At twelve o’clock, Chicago time, on September 30th (the last day) the option was selling below $1.08, and it looked as though his prediction would not be fulfilled. Mr. Gann said, ‘If it does not touch $1.20 by the close of the market it will prove that there is something wrong with my whole method of calculation. I do not care what the price is now, it must go there.’ It is common history that September Wheat surprised the whole country by selling at $1.20 and no higher in the very last hour of trading, closing at that figure.” In over 50 years of trading, it was said that W. D. Gann had made US$50 million from the market. The wealth of that scale compared with the purchasing power at his time was indeed very substantial. Apart from trading, W. D. Gann also wrote several books on his trading methods. However, he kept his core method veiled and confined only to a chosen group of people, who vowed not to give the materials out to others. After W. D. Gann passed away in 1955, there was a long period of time that the name of W.D. Gann was not mentioned in the investment communities. The name of W. D. Gann regained the market’s’ attention beginning from late eighties when some of his materials resurfaced and his books were reprinted. Many researchers and analysts tried to reconstruct his methodology. In the Nineties, an array of schools arose on the basis of his research in time cycle, market geometry and financial astrology.
Basis of W. D. Gann’s Techniques
What are the essences of W. D. Gann’s theory? In W.D. Gann own words in an interview, “I discovered that the law of vibration enabled me to accurately determine the exact points at which stocks or commodities should rise and fall within a given time.” In his book “The Tunnel Thru’ the Air” published in 1927, which was written in veiled language, he wrote, “In making my predictions I use geometry and mathematics, just as the astronomer does, based on immutable laws. My calculations are based on the cycle theory and on mathematical sequences. History repeats itself. That is what I have always contended, that in order to know and predict the future of anything you only have to look up what has happened in the past and get a correct base or starting point.” In explaining his cycle theory, Gann said, “Time is the great factor that proves all things. The measurement of time first originated and based on the earth’s motion upon its axis.” In a nutshell, W. D. Gann made his market predictions based on the law of vibration, natural cycles, mathematical sequences and geometry with reference to the correct base or starting point in terms of market price and time. Law of Vibration Nowadays, most Gann analysts agree that the law of vibration refers to time and price ratio analysis as applied to a market chart. Gann was one of the originators of the famous 50% rule. In his Stock Market Course, he emphasised the importance of the division of three, division of four and division of eight. Hong Kong’s Hang Seng Index demonstrated a perfect match of Gann’s Law of Vibration. In Figure 1, it is shown that the market experienced major supports or resistances at the level of oneeighth (12.5%), one-fourth (25%) and one-half (50%) of the all time high of 18397.57 on 28 March 2000, i.e. 16100, 13800 and 9200 approximately. Natural Cycle Gann mentioned that natural cycle and mathematical sequences are the major approaches to market forecasting. In his writings, he mentioned two major types of cycles: division of the natural cycle, i.e. a year, and division of the cycle of 360. From Gann’s perspective, the major low of 8894.36 (Hang Seng) on 21 September 2001 has a special meaning. That day was the Autumn’s Equinox of the year or half the natural cycle
William Dilbert Gann (1878 - 1955)
Introduction n recent years, the name of William Dilbert Gann has been gaining attention among market technicians. It is said that his market forecasting technique is one of the most complicated technical analytic methods ever in the world and that few people could fully understand it. Nevertheless, W. D. Gann had proven himself to be one of the greatest stock and commodity traders in the last century. W.D. Gann was not a contemporary man. He was an American who traded US stock and futures markets in early Twentieth Century. He became famous among the investment communities by making several accurate calls. One of his most famous calls was his timing of the black Friday in September 1929 when the US long bull market ended all of a sudden. The end of the bull market was also the beginning of the Great Depression in the western world in 1930s. He made his forecast in November 1928, ten months before the collapse.
it is shown that the major market low at 8894.2 of 2000. Day Trading Forex. He published five popular Chinese TA books. where buying opportunity may emerge. Gann had a famous rule on market geometry. his writings and his methods can be found from: http://www. 60 weeks are one-sixth of a 360 weeks cycle. It was a retracement supported at the five-eighth (62. it was 60 weeks from the major high 1021. Market Geometry is a study of relationship between time-axis and price-axis. Principles in Technical Analysis with Technical Indicators. including Gann Forecaster. Lastly. W. which is 120 weeks.5%) of the uptrend from 261.acrotec. Figure 1: Daily Chart of Honk Kong’s Hang Seng Index the changes in trends. This cycle date will fall on 23 June 2002. and Options Trading Strategy. the market trend might be changed. The major low of Malaysia’s Kuala Lumpur Stock Exchange Composite Index (KLCI) at 547. from the all time high at 18397. Mr. Gann.biz or e-mail sales@chartpoint. i. and a major trend change took place. i. Based on this cycle theory. and the Time Trader Charting Software. Besides. “When time squares price. Pak-chung Wong is a well. half of the cycle of 360.chartpoint. D. i. Further details of the seminar can be obtained on page 25.measured from the beginning of an astrological year on Spring’s Equinox.D. including: W. would be an important date to watch. a time / price calculator. Wong will be conducting a Gann Seminar in Malaysia on 25 July 2002 and in Singapore on 27 July 2002. Figure 2: Singapore Straits Times Index and Gann’s 1 x 1 Line For a holistic approach to market forecasting. D.” This statement means when the time and price come to the same magnitude or on a oneto-one basis.com Mr. the Gann 1 x 1 line (with time/price ratio of 1 week for 10 points) from major market high and low accurately indicated More information about the life of W. who specializes in W.e. Gann emphasised the importance of convergence that various methods confirm with each other. The other major cycle date will be 22 July 2002. with major 1 x 1 line support at 1570. Accordingly. the same as the natural cycle date mentioned above. Ratios. Currently. 180 trading days.33.e. Cycle of 360 is of equal importance to Gann.72 in April 2001 can be used as an example (Figure 3).e.57 on 28 August 2000. it was supported by a 1 x 2 Gann line drawn from the 1998’s low at 261.e.known technical analyst in Hong Kong.biz . Gann trading and forecasting techniques. Fibonacci and Spiral Rhythm of Markets. He also developed software for Gann analysis. Gann’s Theory.33 of 1998 to 1021. after the balance between time and price was broken.2 of 2000. The three approaches confirmed with each other that a change in trend has been imminent. one-third of the 360 weeks. Singapore market is on an medium term uptrend. Using Singapore’s Strait Time Index (STI) as an example in Figure 2. a completion of the cycle of 360. Using Hong Kong’s Hang Seng Index demonstrated in Figure 1 again.36 on 21 September 2001 was the 361 trading days after the all time high at 18397.57 on 28 August 2000. Way forward. Figure 3: Gann Analysis on Malaysia’s KLSE Index Market Geometry Geometry is a study of relationship between Xaxis and Y-axis of a two-dimension diagram. a change in trend is imminent. i. 22 June 2002 will be another important date to watch out for trend reversal when the date will be 90 degrees from the Spring’s Equinox.D. time cycle and Gann angle analysis should point to the same conclusion. www.
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