1
4
When the market is moving down in a Five Wave
impulse, draw Gann angles going down from the
previous PRIMARY PIVOT HIGH. The angles should
3
provide RESISTANCE for the TOP of Wave FOUR.
T-96
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Applying Technical Analysis
OPTIMIZED GANN ANGLES
Optimal Gann Angles For
TRW (Stock)
In the past versions, we provided a pre-built scale for Gann Angles for selected U.S. commodities. This created two major drawbacks:
1) The built in scales could not be altered to allow for day to day volatility of the markets.
2) Gann angle scales were only available for selected markets.
We have now added our routines which allows the user to find the optimal angle for any market loaded on the screen including Stocks, Spreads, Cross Rates and Foreign Issues.
The routines also include volatility adjustments.
The optimized scale is printed on the chart and can be saved for future reference.
T-97
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Applying Technical Analysis
GANN BOX ANALYSIS
One of the drawbacks in most programs is the lack of adequate timing studies. We have attempted to meet this need with studies such as the Time Clusters and the GANN BOX
ANALYSIS. The word Gann scares a lot of traders simply due to its complexity and no clear direction on how to use it. In the past two years, we have researched this field quite extensively and have found precise ways to use the Gann Box. The software allows you to draw Gann Boxes in various configurations. So users that follow the traditional Gann methods can still use it as presented in most of the published materials. However, we have used the results of our research and added the PRE-FIXED GANN BOX.
The major criteria we found in our research was the Ratio of the box Rise/Run should be 1
or multiples of 1 such as 10, 20 etc.; Gann Boxes are drawn from Major Pivot Lows or Highs. The amount of price from the pivot is the RISE and the number of bars from the pivot is the RUN. The box shown below uses 450 bars (RUN) and 450 price from the pivot low which is the (RISE). The ratio of RISE / RUN = 450/450 =1.
RATIO = RISE/RUN = 450/450 = 1
RATIO = RISE/RUN = 360/360 = 1
é
PRICE
é
é
RUN = # BARS
RUN = # BARS
The preferred ratios (in order of importance) are as follows : 1, 2, 5, 10, 20, 40 and (2.5 as a last resort).
T-98
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Applying Technical Analysis
Our research on all markets and on all time frames show that if you used the following ratios (in order of importance) 1, 2, 5, 10, 20, 40 and 2.5 (as a last resort) and draw Gann Boxes from Major Pivot Lows or Highs, the angles generated provide Support and Resistance levels as the market progresses into the future. In addition to the ratio, this technique also requires you use a Fixed Time interval of 45, 90, 180, 360 etc.; The following boxes show some of the other ratios that can be used.
GANN BOXES drawn with various ratios.
RATIO = RISE/RUN =
1800/360 = 5
RATIO = RISE/RUN =
900/360 = 2.5 (LAST RESORT)
RATIO = RISE/RUN
RATIO =
= 900/180 = 5
R I S E /
RUN
= 3 6 0 0 /
360 = 10
RATIO = RISE/RUN
= 1800/180 = 10
Since the Box is drawn in advance, it provides a pathway or a road
map for the market. The combination of the Fixed Time Intervals
and the Pre-Fixed ratios provide amazing end results.
T-99
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Applying Technical Analysis
As explained on the previous page, we use pre-fixed time (bars) length of 90, 180, 225,360, 450
etc. along with pre-fixed prices to provide the BOX RATIO of 1,2,5,10,20,40 and 2.5 . By using the PRE-FIXED Ratios, the underlying Math stays the same regardless of the Box Size. In the examples below we use various boxes as the market progresses.
Here we start out
Now we switch to a
with a 90 by 1800
90 by 3600 Box
Box with a ratio of
with a ratio of 40.
20.
ë
ë
This Box provides sup-
port for the prices
marked by the Arrow.
This new Box continues
to provide the same sup-
port but with a different
angle.
New Box
New Box
180 by 1800
180 by 3600
Ratio = 10
Ratio = 20
ë
í
ë
í
Again the same prices
are supported by yet an
other angle. Also no-
tice the new price resis-
ë
tance marked by the
new arrow.
T-100
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Applying Technical Analysis
As the price range expands, the user simply draws a larger Box that confirms to the Pre-Fixed Ratios. The underlying math automatically adjusts itself by shifting angles around but still providing the same Support and Resistance as the market progresses.
í
ë
í
New Box
225 by 2250
Ratio = 10
ARROWS INDICATE THE SAME PRICE REVERSALS PROJECTED BY
DIFFERENT ANGLES FROM BOXES WITH VARIOUS RATIOS.
Long 95 Mar
Short 95 July
WHEAT SPREAD
T-101
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Applying Technical Analysis
March 95
Bean Oil
New Box 360 by 3600
Ratio = 10
í
ë
í
ARROWS INDICATE THE SAME
PRICE REVERSALS PROJECTED
ë
BY DIFFERENT ANGLES FROM
BOXES WITH VARIOUS RATIOS.
Gann Boxes drawn with these ratios work on all Commodities, Stocks and Spreads using Weekly, Daily and 60 minute charts. The Gann Box also works well with Elliott Wave Analysis.
T-102
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Applying Technical Analysis
APPLE
Computer
March 95 Yen
– 60 min
T-103
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Applying Technical Analysis
USING PRE-FIXED GANN BOX WITH ELLIOTT WAVES.
The PRE-FIXED Gann Box can be used along with Elliott Wave analysis. There is not much to explain on how to use this combination. Remember the public service announce-ment that says “Here is your Brain, here is your Brain on drugs, Any questions?”. Likewise, here are two charts with Elliott Wave analysis and the Pre-Fixed Gann Box.
ANY QUESTIONS?
FEB 95
Live Cattle
MAR 95
SUGAR
T-104
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Applying Technical Analysis
REGRESSION TREND CHANNELS
This is a simple but very effective study. The idea is to draw an upper and lower channel by using a Standard Deviation of the prices. It is similar to the Bollinger Bands which draw bands using standard devia-tions of a moving average. However, instead of using a moving average, we are simply using the Linear Regression line of a swing identified by you.
Upper
Channel
î
ëLower
é
Channel
ë Linear Regression
Line using the Mid-
Channels drawn by
points of data.
using a 2.5 Standard
Deviation of the
Midpoints and the
Regression Line.
The chart on the left shows two market swings from low to high. The line drawn through the middle is a standard Linear Regression line using the midpoints of the swing. The chart on the right shows the upper and lower channel drawn using 2.5 standard deviation of the Regression Line and the Midpoints. The Regression Channel menu allows the user to calculate the Trend or Regression line by using the midpoint, high, low etc; It also allows the user to set the amount of Standard Deviation for the Upper and Lower channels.
In addition, a Pearson’s r is included that shows how well the Linear Regression fits the data.
T-105
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Applying Technical Analysis
USING THE REGRESSION TREND CHANNELS
When the Market is trending or just trading with a bias in one direction, the Regression Trend Channels can be used to define the upper and lower boundaries of the market. As long as the momentum stays in the same direction, the market tends to stay within the channels. As soon as the market changes bias, the prices break the channel signalling the end of the move.
The primary functions of the Regression Trend Channels are A) catching the end of a Wave Two to trade the Wave Three phase B) Protecting profits inside a Wave Three C) Entering at the end of a Wave Four for the Fifth Wave sequence D)Protecting profits in a Fifth Wave and entering a trade in the opposite direction at the end of a Fifth Wave. The following examples will make this very clear.
Buy at the end of
Take profits at the
Wave 2
end of Wave 3
ì
ë
Buy at the end of
Sell at the end of
Wave 4
Wave 5
í
ë
Take profits at the
end of Wave 5
T-106
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Applying Technical Analysis
T.J.’s Web Levels
The T.J.’s Web Levels are special price arrangements based on Fibonacci relationships from the previous weeks market action of that stock. Three areas are calculated for the following day: neutral zone, resistance area, and support area.
NEUTRAL ZONE:
This zone is usually narrow and is a few points above and below the
previous weeks close. When the prices trade above the neutral zone,
the stock is considered to be strong, and vice-versa.
RESISTANCE AREA:
Above the neutral zone, there are four resistance levels called RA, RB, RC, and RD. These are Fibonacci resistance levels based on the previous weeks stock actions.