Gann Pivots And Fibonacci Pivots: Three Things You Should Know
WD Gann is known as a mystical figure from the first half of the 1900 century. His theories and writings are steeped in mystery. Gann wrote in riddles and often quoted the bible when giving lessons on the market place. I believe from doing extensive research he did this to bury his true ideas about how he analyzed the market place. He did not want to give up his edge that easily. I was fortunate enough to be able to read some of his original writings from a colleague of mine that was in the Gann Society of New York. I will write about three important Key elements you should know about Gann and Fibonacci levels.
Traders use Fibonacci levels as a way to gauge the markets intent. Gann and Fibonacci levels are related in many ways. Gann believed in a natural order in the market place, Fibonacci Levels are rampant through out nature. When these levels overlap we have what is known as confluence of price. Gann added a time component to the equation. He stated that when time met price certain things should happen in the market like and end of a move and the beginning of another, or a zoom to the next Gann Level. Here is our first important point:
Price verse Time: The square Root Of Price is its time component. So in dealing in Foreign Exchange which is the market that I deal in. We would take the price and get its square root. If we find a key low or high we would calculate from here. A key high or low could occur at a Fibonacci retrace level the 1.382 and the 1.618 levels are good to look at(when done the proper way) for key levels to get the square root of price for the time component. Example we find a low at a 1.618 Fib extension level lets say its 1.5088. When get the square root of the price and find the factor to be 1.228. Move the decimal over one place to the right and get 12.28 or rounded down to 12. Project out 12 bars to see the next reactionary point of the market.
Be Open FLEXIBLE: Gann always stressed trade the market, use the points that you have figured out and listen to what the market is telling you. Don't fight the tape.
Gann Angles: Gann angles go from a 1x1 balanced market to 1x8 super parabolic market and an 8x1 parabolic downward market. Markets that are in a "normal" condition stay between 2x1 and 1x2 Gann angles. The most important angle is the 45 degree angle known as the angle of death. If a market breaks this angle the up or down move is over and it will trade to the next Gann Angle, you should begin to fade the reversal moves once a Gann 45 degree angle is broken.
So here you have a good basic starting point for Gann pivots. You must get the time component from a major low or high. Use Fibonacci levels to help gauge this. The 1.382 and the 1.618 levels are important levels to look at. Stay flexible when trading, listen to what the market is telling you. Finally use the 45 degree angle of death to determine whether or not a move has ended.
Article Source: FxTradingStock.com
About the Author
And Now I would Like To Invite You To Claim Your Free Gann Report. Please VisitGann Angles Tom Strignano Is A Retired Chief Forex Trader With Two Decades Of Experience Please See Article OnGann Pivot Trading With TRNs.
by: Tom Strignano
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Word Count: 551
Date: Fri, 11 Feb 2011
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