Looking @ W.D. Gann – Part Three

We’ve looked and considered key quotes, statements and observations of W.D. Gann – he made many more and if you’re interested in his works then I cannot recommend enough his books and courses.

Gann also noted that between price swings (ranges) there are resistance and support levels, Gann broke these down into 3rds and eighths – Simply DIVIDING the range by 8 & 3 to obtain the respected % division i.e. 33.3%, 66.6%, 62.5% etc

Some of these are incredibly close to Fibonacci levels and one has to assume that Gann knew and understood about Fibonacci levels but choose to use his own system of determining price support and resistance levels.  Of it may be that Gann was oblivious to Fibonacci and applying it in the markets of which I very much doubt as he must of come into contact with R.N. Elliott (of Elliott Wave Theory) during both their times commenting on financial markets.

Let’s take a look at all these levels:

Ganns Eighths

Eighths & Thirds

Fibonacci Levels – for comparison purposes to Gann Levels

As you can see from this brief look at Gann and Fibonacci levels they are sometimes hit to the tick and others price is halted just short or after the appropriate level – there is no way to pinpoint this.

This means that it is also impossible to accurately predict which level will hold, the important part is realising that price OFTEN corrects at these levels

Now Gann also applied these levels to TIME, but that is another matter and probably a post I’ll not get involved in as it is highly subjective, but, essentially let’s pretend that we are monitoring a 52 month TIME cycle – Gann would divide this into 3rds and eighths etc to look for possible reaction points in Time

Gann said that TIME was the most important factor to consider, yet he died with no exact mention [I know he indirectly mentions it in his courses] of the exact perameters that he used, they are not in his courses – we know that Gann made mistakes because his Financial Forecast that he created is slightly out by a few years for his predictions on the markets in the 2000’s – although I salute him for being able to predict them that far in advance in the first place.

Now I’ve studied both Gann and Fibonacci levels so far I’ve not been able to accurately predict which level price will reach but more often than not the 50% level is reached for retracements and the 100% extension/projection level.  It’s a case of see what happens when price gets there, HOWEVER, if you employ the tactics of Robert Miner other Fibonacci projections falling around key support/resistance levels make for  a high probability zone – but still we never know for certain!

Gann liked the 50% level, here he wrote “Always remember that the 50% reaction or halfway point of the range of fluctuation or of the extreme highest point of any particular move is the most important point for support on the downside or for meeting selling and resistance on the way up.  this is the balancing pont because it divides the range of fluctuation into 2 equal parts or divides the highest selling point into 2 equal parts”

Gann’s courses (which are 1000’s of pages deep) contain more detail and examples – remember these courses that he sold in the 1930’s sold for thousands of US$!

Anyway we can see that Gann considered and used support/resistance levels of 8ths and 3rds

Bonus entry:

In Gann’s courses he makes the following statement, along with many others[edited]:

“Mathematics is the only exact science.  emerson said ‘god does indeed geometrise’.  another wise man said ‘ there is nothing in the universe but mathematical points’ and Pythagoras, one of the greatest mathematicians that ever lived, after experimenting with numbers and finding the proofs of all natural laws, said ‘Before god was numbers’.  We use 3 figures in geometry – the circle, the square and the triangle.  We get the square and triangle points of a circle to determine points of time, price ans space resistance.  We use the circle of 360 degrees to measure Time and Price”

Gann often used criptic phrases within his works (such as the one directly above) which has caused thousands of traders/investors try to work out his exact meaning.

Hope you enjoy

The Hovis Trader

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