Squaring a Range of Price

For this post I'll show how to create a Gann Square using the stock Gann fan. This time the method used will be squaring the range. The chart will be a EURUSD 15 min. chart with the start and time being 8/22 3:15 GMT. The range to be squared is the most recent swing from high to low up to that point which covered 69 pips. The average daily range for the EURUSD pair is around 100 pips. So the square will be based on 69 x 2 or 138 to hopefully contain upcoming price movement within the square. Also, recall from the Gann Grid post that price moved in ranges of about 135 degrees or pips so 138 should be near spot on.

First, square the chart by setting the scale fix One to One in the chart properties. Mark off the bottom of the range with a verticle line at the bottom of the swing and horizontal lines on the bottom, top, and then an equal amount of the range higher. Mark off 69 bars and 138 bars in the future with vertical lines.

Next, add the Gann Fan tool to the bottom corner going forward. set the ratio to 1. Being a squared chart, a ratio set to 1 creates a perfect 1x1 or 45°. Add another Gann Fan to the top the upper corner going forward. Set the ratio to -1 to have the fan going downards. Because of the future chart scaling, the 1x1 angles of the fans might not hit the future corners perfectly. That's ok because as Metatrader adavances, the scaling becomes correct. It's a stupid bug, really.

Now mark off the intersections of the fans with vertical lines. Price usually reacts at those intersections. Sometimes just for a bar, other times it's a significant prce change of direction.

As you can see, price completed the square in both price and trime. The intersection lines provided a few clues to when price might react in time. In a future post, I'll go over squaring a range of time.

Updated Pound Fib Count Down

Today is the Fibonacci Count down day on my British Pound Daily chart. I've had to wait for price to make what I believe is a top for the day. I've set up a net of sell stops to catch price going down. If I'm wrong, hopefully only one or two if any get triggered for small losses.

The first chart shows my target which is 3-8 days out. The price target is based on that trend line that has been very strong. If it gets broken, that's all the better. But I think it all hinges on the New Homes Sales report due this Friday along with a couple of other reports.

The second chart is the ellipse updated from a previous post.

Manual Gann Grid Update

Here is an updated chart of the Gann Grid created in a previous post. Note how "timely" many of the peaks were. I shorted a couple of those with good results. Knowing "when" to start looking to get out makes all of the difference in the tight ranges. All of that based off of a grid originating over 2 months ago.

The Ellipse

Last week's GBPUSD spike downward provided the 3rd point of contact on a 1 hour chart for the construction of an ellipse. I had started the ellipse based on a 2 points of contact, but was off in enough ways to not trade it.

One of the key elements is the angle of the major axis. More often than not, it will be 60° in difference from its mated axis of its mated ellipse. The current angle is 63° to the chart, but just over 60° from it's mate.

The minor axis usually defines the beginning or end of the famous 50% consolidation area. In the chart below, the minor axis acted as a minor support level to be broken while the major axis provided the "path".

Another other key element is the inner circle. The inner circle usually defines the consolidation area by either containing price along the perimeter or the perimeter acting as some sort of support/resistance.

Price is in a triangle right now, but the apex is also a minor degree in time from the start of the Gann Grid. Based on my analysis from other charts, I'm expecting price to go down. However, I wouldn't be surprised to see a Ross Hook aka false breakout heading North before jetting South. So I wait for a signal to short.

I'm also including a 4 hour chart of the USDX or DXY(Dollar Index) and an ellipse I've been watching there.

Gann Grid Clarification

I've been asked to explain the Gann Grid specifically the formula for finding 45° from the start price.

The formula I used was for Excel. It might be easier in some different formats.
In a more function type format it would be:

Degrees up from start price = (squared((sqrt(converted_price+degree_factor)))/10000

For more of a descriptive notation maybe something like:


Degrees up from start price =((|converted price + degree factor|) ^2)/10000

We'll say that the pipes on either end mean to square root that section.

Going through the steps the first thing to do is convert the price to something squareable. So 1.3261 becomes 13261.

So the formula should read:
45° Price=((13261^0.5+.25)^2)/10000 = 1.3319

^.05 means to the 1/2 power or the square root. ^2 means square. (^3 means cube, etc)

The degree factor is used to get the degrees converted to a base 10 number or whatever. It's found by taking the (degree/360) x 2. So in our case, (45/360)*2

So the full process is to take the converted price 13261, find the sqrt (115.156) and add it to the Degree Factor of .25 gives 115.406 and then square that which gives 13319. Divide by 10000 to get price of 1.3319.

I hope that makes better sense.

Fibonacci Count Down

After doing some Fibonacci bar counting and the GBPUSD Daily Chart, the date 8/22/07 comes up as a countdown and cluster point. It's also 450° or 1 1/4 times around the circle from the start of the swing low and start of the current Gann Grid.

The count is 1, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, etc. It's also good to look for doubles of those numbers. 2, 6, 10, 16, 26, 42, 68, 110, etc. The hard part is to not to get carried away. By starting with the Fibs first, the numbers will usually reveal themselves. In the chart below I found 2 instances of 68 or 34 x 2.

Fibonacci growth cycles don't always look pretty, but the points of the cycle make for good swing trades because the minimum is at least 3 trading days and many times 5 to 8 trading days. There's a nice tetrahedron in there if you can see past some of the clutter. Ideally, this point of time will also be a good spot to continue the Fibonacci growth patterns and count down.

Based on the last low, the date will be 3 bars away, so if the last low is truly a low, I'll be looking to short on the time target.