FXstreet.com Live Sessions Archives

The Golden Methods of W.D.Gann

Expert:  David Burton, CEO & Founder of School of Gann 
Start:    February 14, 2006 - 07:30GMT 
End:     approx. 08:30GMT

Topics that will be covered for above session are: 

• The long term cycles in Gold
• Gold in a bull market?
• The British Pound
• Debt clock

Who is David Burton?

DAVID BURTON has been studying and trading the methods of the most famous trader of all time, W.D.Gann.Gann was a financial astrology up until his death in 1955. David has been studying astrology since 1980, not modern day astrology, the astrology of the ancients. David uses both helio-centric and geo-centric in his studies. In June 2002 on Gann’s birthday David ran the first four day workshop teaching the methods of Gann. Only running a few workshops a year to a limited number, he discovered that the basis, chart reading, money management,seasonal patterns etc were not under stood even by people that have been trading for a number of years,this lead to the home study course for the beginner completed in march 2005. To understand the methods of Gann you have to have a strong foundation otherwise you will never keep your money. David hasjust set up a new website THE SCHOOL OF GANN to keep Gann’s methods alive, hoping that people will study Gann and enjoy the journey and success David has had with Gann. David publicly forecasted in advance the 130 high in cotton in 1995, the 737 high in wheat in 1996, the major low in cotton in 2001as well as many others which are on his website www.schoolofgann.com

Speech Material:

The Golden Methods of W.D.Gann

The method of W.D.Gann is always to study history to forecast the future outcome. “The future is just a repetition of the past” W.D.Gann. Gann is the only person that when so far back in history to study cycles on different markets. People’s life structure is not even close to Gann’s to put in the amount of study he did. He had commitment and passion to study cycles. This is what you need to success in anything in life.

The long term cycles in Gold

The Bank of England was incorporated on 27th July 1694 and began to exert a steadying influence on the price of gold for the next 234 years.

The Gold standard was first established in 1717, but didn’t become official until the Peels Act of 1819.

The highest price Gold hit was $19,390-00 on 31st May 1781 when the continental currencies collapsed. This is where the saying comes from “I don’t give a continental”.

Other high prices were on 1st July, 1864 at $59-12, 24th September 1869 at $33-49.

The US abandoned the gold standard on 15th August, 1971 and Gold rose for 9 years to $850-00 an ounce on 21st January, 1980.

Gold fell to an extreme low on 15th July, 1999 of $253-30 and a slightly higher low on 2nd April, 2001 at $255-90 an ounce.

We will now look at some of these dates astrologically to have a road map for the future, which is what Gann would have done.

The Bank of England has a sun conjunct Jupiter in Leo. Leo represents the Sun and Gold. Mercury is in the Leo trine Saturn. Primary interest would have been trading in Gold. Pluto is in Leo, Pluto, is anything underground, again looking at Gold as prime interest of the bank. Based on this chart we have Saturn (restrictions) conjunct Jupiter (Expansions) Sun (Gold) in February and March 2006.

This is likely to keep a lid on Gold after a period gold is likely to keep going higher until 2009 when Uranus conjuncts Neptune in this chart. This fits in with the $U.S getting weaker. Also fits in with the story on u.s debt and bonds in the last issue of “Your trading edge”

Major structure changes to this Bank in 2022 and 2024 when Neptune returns to its own place and Pluto is opposite its place of birth. This fits in with the end of the depression which should be more than a decade long. Companies and people always go broke at a bottom. Again Australia will have no debt by June 2006 and this would be the safest place to have your cash.

Gold in a bull market?

Click to enlarge:

Gann said “Your monthly chart is your trend indicator”, its has been making higher tops and higher bottoms since the low in August 1999. (Bullish). Since the second higher bottom it has only corrected two months on the way up. Therefore unless it corrects more than two months the trend is still up.

Euro:

Click to enlarge:

Gann divided the market into eights and thirds. Eights are very important both time and price. Why? because all the eights of a circle reduce to the number nine. Nine being the highest digit. This is why Gann used the square of nine, the old Hindu tea calculator. If you add all the numbers from 1 to 9 they equal 45, Gann’s death number. Getting back to gold, it needs to break the 50% level at $475.00 Per/once to be really bullish. 50% equals 180 degrees and 1+8+0 = 9.

The 2 x 1 Gann angle crosses around the $475 level as well giving a doubly strong level to get through. Once above the level it could go anywhere $1600 or higher? 

The all time high in Gold 31st May 1781

In this chart Jupiter is in Scorpio, Scorpio being death, debt and taxes, which occurs at the same place again in October 2006 this happens ever twelve years so it’s only a small cycle, transiting Pluto squares Neptune in 2009 indicating higher prices, this happens approx every 130 years.

The most recent high made on 21st January 1980 at $850

Saturn will return to its same position in 2009 and Uranus in 2022, both look at high price years for Gold.

Should you buy currencies or Gold? Over the last 10 years central banks have been selling all their Gold. The main reason would be that there’s a holding cost to physical gold (storage and insurance) , where if you had currencies other than the $US you have been receiving interest providing the interest rates have been higher than the US interest rates, which in most currencies they have.

Also the currencies have appreciated against the US since 2001.

People in the US who switched their money to the pound, New Zealand and Australian Dollars made a fortune. I heard Bill Gates was buying property in New Zealand when the $N.Z was below 40 cents, it now over 70 cents and property has doubled and tripled. This is exactly the sort of thing Gann would be doing if he was alive today. Those who bought property in these countries and sold at the top of the property boom (Saturn in Cancer) a few years ago even made more money.

The British Pound

The pound top in 1864 at 12-97 pounds and fell to an all time low of 1-034 pounds in 1985, a hundred and 121 year bear market (Gann’s 1/3 of circle). See chart 4 Yearly British Pound 1864 – 2005.

INSERT YEARLY BRITISH POUND
Click to enlarge:

The Pound has turned Bullish breaking the 2 x 1 Gann angle coming down from the high of 7-00 pounds in 1914, this broke this angle to the topside giving a buy in 2002 at 1-50 pounds.

The 4 x 1 Gann angle from the same high, and 2 x 1 Gann angle from 1864 high cross a 4-50 in 2009/2010. The 1 x 1 Gann angle from the 1985 low also hits that area.

If someone was wanting to buy gold you would get more leverage by buying futures than buying physical gold. With currencies you now can trade spot currencies, something you could do ten years ago.

Summary

You now have a very small insight to why Gann went so far back in history. This is the correct way to look at Gann, not what everyone else is teaching.

W.D Gann - The Numbers and Gann's Geometry Practical Application of yours postulates

Date: December 6, 2005 15:00GMT 10EST

Expert: Adrian Aquaro, Head of Trader College LLC and True Market LLC

Topics:
- Angles: The sustainability of the angle of 45 º
- Speed lines.
- Gann's Square.

Who is Adrian Aquaro?
Adrian Aquaro has been a trader for the last 3 years, specializing in the International Foreign Exchange Market and acting as an Introducing Broker for the Latin America market. He heads True Market Services LLC and is also the director of Trader College LLC. He has vaste experience in forex education, making of him a leader in this particular part of the financial services industry.

Speech Material:

W.D Gann - The Numbers and Gann's Geometry Practical Application of yours postulates
Mr. Gann was known as a prolific businessman and for the theoric and practical contributions he had make to Technical Analysis, especially his concept of price and it’s relationship with time. It was only and insuperable.

Though his mathematical and geometric theories are complex once, they are understood they are useful and help to predict market behavior. It has been said of him: "... We have seen him put 16 consecutive orders in the same direction, eight of which turned out to stop exactly in the support or resistance of a Gann number

A record like this in trading does not have precedents in all the history of Wall Street (Ticker and Investment Digest, Volume 55 Number 2, December, 1909, page 54.)

The Geometry
Many people claim that Gann's theories are big series of discoveries that do not keep any relation, but this is not real. Gann believed that fixing all variables in the technical analysis (price, range of fluctuation and time), they could be analyzed at the same time. His symbol, formed by a circle with a square and a triangle inside, summarize his whole analysis technique.

Gann discovered that the supports and the resistances of the prices could be calculated taking the higher price of any rally, and dividing it by four and by three - in other words in his fourth and third parts. The square and the triangle inside the circle show us this concept. The points of resistance are calculated acting of similar form with the ranges of fluctuation and the lapses of time.

Angles: The Sustainability of the 45◦ Angle
He taught his pupils to observe soils and roofs every 30 days, using the degrees of the angles of his symbol as help, verifying that 90-, 180-, 270-and 360-, which results to be the sum of the angles of a square or 120-, and 240-, this ones of a triangle, and then use them as a forecast (prediction) tool, and then find it’s relation with time frames, so as to determinate the moment the rally will reach the objective price defined by Gann.

But actually the cycles that more importance Gann gives are the cycles of 144 and 360 days and their respective divisions in a quarter and a third.

Gann affirms that on a market with a defined trend, trend lines possess certain angles; and a change in the trend takes place when they give themselves three temporary movements in opposition to the principal movement (for example, three days of falls after a marked up). Therefore, we will say that a trend can be inverted temporarily or definitively, depending if the correlation between price and time is kept or not.

The most important angle for Gann is the 45 º degrees one (known also as line 1x1), where the relationship between price and time equals one.

When bigger is the angle that dominates a raise, stronger is the force of the movement. Let´see speed lines now Speed lines, are used to establish dynamical market targets, supports and resistances.

Gann divides a 90 degree angle in 8 different ones, (you will see the percentage in next paragraph) that define a possible setback; and once the price breaks the 3rd speed line (or angle) the probably of a complete correction increases, and becomes a possible aim.

Retracements
Now, for Gann, more significant percentages of setback from a maximum or a minimum are 12.5 % (1/8), 25 % (2/8), 37.50 % (3/8), 50 % (4/8), 62.50 % (5/8), 75% (6/8), 87.50% (7/8) and 100% (8/8) from previous movement. Gann gave main importance to 50%, 37,50% and 62.50% retracements; these three alterations are the most balanced alteration, the minimal alteration and the maximum alteration of the movement.

Gann attributed a particular importance to the setbacks of 50 %, of 37,50 % and of 62.50 %; three alterations characterize respectively the most balanced alteration, the minimal alteration and the maximum alteration of the movement.This nowadays allows us to know which are the possible aims y/maximums or minimums of reaction of the market.

How to Use Gann
The rule to use the Gann square is based on making a logarithmic spiral with a growth of 0,0005. To make a Gann letter, you have to take the minimum historical price for a pair in order to place the different prices on the square with the logarithmic spiral form. Then, you have to draw up two principal lines, first taking the center in horizontal form and the second in vertical form. You will have the square divided in four zones.

Let us see the example.

Click to enlarge:

Now you have a square and a lot of number/prices. How can you use them?
Once you complete the spiral, check the actual price . If the principal trend is bull, target will be the closest number to line at right, and if the principal trend is bear, target of the move will be the price located in the near line but pointing left. Gann numbers work like supports and resistance. We have thousand of examples about that. Sometimes, you see that, after an economic data, price raise up, and stop at some point. Usually, this point is a Gann number.

Let’s see these simple examples:

Click to enlarge:

Click to enlarge:

As you can see, Gann is a powerful tool which will help you to know where prices will probably go to in a long term rally.