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Wong20Pak Chung20 20Gann27s20Theory20Explained
Wong20Pak Chung20 20Gann27s20Theory20Explained
D Gann’s
Basis of W. D. Gann’s Techniques
I
n recent years, the name of William In over 50 years of trading, it was said that W. D. tance of the division of three, division of four
Dilbert Gann has been gaining attention Gann had made US$50 million from the and division of eight.
among market technicians. It is said that market. The wealth of that scale compared with
his market forecasting technique is one of the the purchasing power at his time was indeed very Hong Kong’s Hang Seng Index demonstrated a
most complicated technical analytic methods ever substantial. Apart from trading, W. D. Gann also perfect match of Gann’s Law of Vibration. In Fig-
in the world and that few people could fully wrote several books on his trading methods. ure 1, it is shown that the market experienced
understand it. Nevertheless, W. D. Gann had However, he kept his core method veiled and major supports or resistances at the level of one-
proven himself to be one of the greatest stock confined only to a chosen group of people, who eighth (12.5%), one-fourth (25%) and one-half
and commodity traders in the last century. vowed not to give the materials out to others. (50%) of the all time high of 18397.57 on 28
After W. D. Gann passed away in 1955, there March 2000, i.e. 16100, 13800 and 9200 ap-
W.D. Gann was not a contemporary man. He was a long period of time that the name of W.D. proximately.
was an American who traded US stock and Gann was not mentioned in the investment
futures markets in early Twentieth Century. He communities. Natural Cycle
became famous among the investment Gann mentioned that natural cycle and math-
communities by making several accurate calls. The name of W. D. Gann regained the market’s’ ematical sequences are the major approaches to
One of his most famous calls was his timing of attention beginning from late eighties when some market forecasting. In his writings, he mentioned
the black Friday in September 1929 when the of his materials resurfaced and his books were two major types of cycles: division of the natural
US long bull market ended all of a sudden. The reprinted. Many researchers and analysts tried to cycle, i.e. a year, and division of the cycle of 360.
end of the bull market was also the beginning of reconstruct his methodology. In the Nineties, an
the Great Depression in the western world in array of schools arose on the basis of his From Gann’s perspective, the major low of
1930s. He made his forecast in November 1928, research in time cycle, market geometry and 8894.36 (Hang Seng) on 21 September 2001 has
ten months before the collapse. financial astrology. a special meaning. That day was the Autumn’s
Equinox of the year or half the natural cycle
measured from the beginning of an astrological the changes in trends, after the balance between time and price was broken. Currently, Singapore
year on Spring’s Equinox. Based on this cycle market is on an medium term uptrend, with major 1 x 1 line support at 1570, where buying oppor-
theory, 22 June 2002 will be another important tunity may emerge.
date to watch out for trend reversal when the date
will be 90 degrees from the Spring’s Equinox. Figure 2: Singapore Straits Times Index and Gann’s 1 x 1 Line
For a holistic approach
Cycle of 360 is of equal importance to Gann. to market forecasting,
Using Hong Kong’s Hang Seng Index demon- W. D. Gann emphasised
strated in Figure 1 again, it is shown that the the importance of con-
major market low at 8894.36 on 21 September vergence that various
2001 was the 361 trading days after the all time methods confirm with
high at 18397.57 on 28 August 2000, i.e. a com- each other. Ratios, time
pletion of the cycle of 360, and a major trend cycle and Gann angle
change took place. analysis should point to
the same conclusion.
Way forward, half of the cycle of 360, i.e. 180
trading days, would be an important date to The major low of Ma-
watch. This cycle date will fall on 23 June 2002, laysia’s Kuala Lumpur
the same as the natural cycle date mentioned Stock Exchange Com-
above. The other major cycle date will be 22 July posite Index (KLCI) at
2002, which is 120 weeks, i.e. one-third of the 547.72 in April 2001
360 weeks, from the all time high at 18397.57 can be used as an exam-
on 28 August 2000. ple (Figure 3). It was a
retracement supported at the five-eighth (62.5%) of the uptrend from 261.33 of 1998 to 1021.2 of
Figure 1: Daily Chart of Honk Kong’s Hang 2000. Besides, it was 60 weeks from the major high 1021.2 of 2000, i.e. 60 weeks are one-sixth of a
Seng Index 360 weeks cycle. Lastly, it was supported by a 1 x 2 Gann line drawn from the 1998’s low at 261.33.
The three approaches confirmed with each other that a change in trend has
been imminent.
Market Geometry
Geometry is a study of relationship between X-
axis and Y-axis of a two-dimension diagram. Ac-
cordingly, Market Geometry is a study of rela- More information about the life of W. D. Gann, his writings and his methods can be found from:
tionship between time-axis and price-axis. Gann http://www.acrotec.com
had a famous rule on market geometry, “When
time squares price, a change in trend is immi- Mr. Pak-chung Wong is a well- known technical analyst in Hong Kong, who specializes in W.D. Gann
nent.” This statement means when the time and trading and forecasting techniques. He published five popular Chinese TA books, including: W.D. Gann’s
price come to the same magnitude or on a one- Theory, Fibonacci and Spiral Rhythm of Markets, Day Trading Forex, Principles in Technical Analysis with
to-one basis, the market trend might be changed. Technical Indicators; and Options Trading Strategy. He also developed software for Gann analysis, including
Gann Forecaster, a time / price calculator, and the Time Trader Charting Software.
Using Singapore’s Strait Time Index (STI) as an
example in Figure 2, the Gann 1 x 1 line (with Mr. Wong will be conducting a Gann Seminar in Malaysia on 25 July 2002 and in Singapore on 27
time/price ratio of 1 week for 10 points) from July 2002. Further details of the seminar can be obtained on page 25, www.chartpoint.biz or e-mail
major market high and low accurately indicated sales@chartpoint.biz