Squaring a Range of Time

In this post I'll go over an easy method of squaring a range of time using the tools in Metatrader 4.

As shown in the previous post about squaring a range of price, squaring the path of price can reveal future patterns of price behavour in price and time.

For this example the EURUSD 1 hour chart is being used. The first step will be to square the chart or set the scaling one to one which is done in the chart properties. It really isn't necessary, but it keeps the squares square as the chart advances and the range of price causes the scaling to fluctuate. Depending on the instrument and time frame it may be necessary to either switch to a different time frame, compress the spacing between bars, or both.

I scrolled back through the chart and just picked an arbitrary range. The time range will be 6/5/07 14:00 to 6/13/07 11:00 for a range of 140 bars. Use the cycle tool on those points to create the cycle going forward.

From the pivot bottom count up instances of 140 pips and mark with a vertical line. The range has now been squared to 140 x 140. 140 is now 360° in price of time of the previous range.

I like to break the rang up into halves so add verticle at 70 bars and a horizonantal at 70 pips from the pivot bottom.

Next up is the Gann grid. I put the end point on the 70 bar/70 pip intersection or the center of the 140 square. Then add horizontals at the intersections going up and down.

The chart below shows how price reacted at points of time and price. Also notice how the diagonals or 1x1 lines acted as trend lines as wells as support/resistence.

The grid can be divided smaller by adding more verticals and horizontals at the intersection points.

Bullseye on the Dollar Index

Wow, every now and then even I get lucky. Back on Aug. 16 in this blog I posted some targets for the Dollar Index. The first mark hit right on the nose. Price spiked up to nail the 'X' that was placed two weeks ago. The second chart below shows new targets in addition to the those already there. I don't think all of them will hit. They're just possibilities. But the main thing is that I think the dollar is still going to rally. Based on the time and price cycles.

A Built Case on Euro Direction

After sitting aside for a few days while price moved North against my previous analysis, I started to build a case to be on the right side for the next move. Luckily, my pip net strategy kept the loss small and to one trade.

The first piece major piece of the puzzle is simply a trend line. Going back to the Manual Gann Fan created on the Euro 30 minute chart, price has failed to penetrate a trend line. That trend line also provides the stop loss area.



The next piece is a "Natural Cycle" I keep track of. It doesn't always hit dead bang on the vertical lines but hits often enough and usually within a reasonable window of a few days either side. Keeping track of the swings reveals an interesting pattern. Price looks a little early, but close enough to call it a swing top based on a perponderance of the evidence or however you spell it.



Like the ellipse, the parabola is a powerful geometric shape. And like the ellipse it is also a conic section. In fact, the parabola can even be considered half of an ellipse. The method I use I picked up from a friend, Soso. No image for this one, but it's pretty easy to visualize. Basically imagine the cup/handle pattern, but with a bowl instead. Look for instances of symmetry for the lowest or highest point of the parabola.

The final piece to talk about here is the Gann Square of 144. 144 is 12 squared. It is also a Fibonacci number. Gann said that those were very important numbers because they show up in the Bible a lot. 12 is also the number of signs in the Zodiac of which Gann was very versed. I have two instances of the chart. One for calendar days and one for trading days. It's always tough to know which is going to matter the most, but both are at key lines or angles.



There is actually one other piece. The US Dollar Index is still playing out in the ellipse from a few posts back. Notice how price is at the ellipse boundary and also the 90° mate to the root ellipse axis. If it holds, it has no where to go but up. (That means down on the Pound and Euro. Up on the Yen, Loonie, and Swiss Franc.)

Countdown and Ellipse Update

The Pound Ellipse failed. That rarely happens. Especially with that many points of contact. However, when the pattern does fail the time mark usually holds which it looks like it might. Going back to a natural cycle wave count method, I should have seen that there was a conflicting signal with the ellipse.

Ironically, a Euro ellipse I had drawn going to the upside that I thought would fail is playing out. Again, I should have acted on the conflicting signal and the 2-1 vote against the pound. Luckily, only one of the orders triggered for a loss. That's the good thing about using stop and limit orders.

On further analysis the fib bar count did work. I just missed the sign to look upward. I was too caught up in the ellipse pattern to think otherwise. 7 of the 8 previous bars were down and the last bar was down, so why I was looking to go short, is beyond me. The reversal was clearly going to be to the upside since the consolidation seemed to absorb any downward momentum. If I get time, I'll post some charts that all seem to be on the same side this time. Squares of 144, more ellipses, and the dollar index. I've got some short orders waiting on the down side on both pound and euro.

Gann Annual Forecast

WD Gann used to put out forecasts every year and they were usually spot on. I read somewhere that his technique was to just go back x amount of years and put up the actual chart lines from previous years. So I just tried it out with GBPUSD daily data. I went back 5 years to 2002, 10 years to 1997, and 20 years to 1987 and plotted them out in Excel.

Pretty interesting results. 2002 and 1997 were a little early on the high compared to 2007 and the recent drop. 1987 was a tad late and inverted, but the magnitude is definitely there.

Here is a link to his 1929 forecast: http://mysite.verizon.net/bonniehill/pics.aux/gann/Forecast1929.jpg