Constructing a Square
Squares consist of geometric angles, support resistance lines and Squares consist of geometric angles, support resistance lines and timing. The price and time support resistance levels of a square timing. The price and time support resistance levels of a square should include 1/2, 1/4ths and the 1/3rds. These can be applied to should include 1/2, 1/4ths and the 1/3rds. These can be applied to static or variable
static or variable squares, and squares, and squares of the rangesquares of the range..
To get away from the static and variable squares for a moment, high or low. This does not mean you can only use the lowest low or high or low. This does not mean you can only use the lowest low or the highest high, because a square may be applied to any the highest high, because a square may be applied to any significant swing point. Once a major swing has been identified it significant swing point. Once a major swing has been identified it can be used as a reference point for measuring time and price.
can be used as a reference point for measuring time and price.
Major highs
Major highs and lows and lows in market in market price provide price provide you with you with the startingthe starting points.
points. The The first first thing thing you you want want to to do do is is divide divide the the price price andand time into quarters and thirds. Some suggest eights. The goal in time into quarters and thirds. Some suggest eights. The goal in doing square analysis is finding the symmetry of the markets price doing square analysis is finding the symmetry of the markets price movement.
movement. The The angles angles are are an an instrument instrument to to find find that that symmetry.symmetry.
Start the angles from the high and low end of the square’s range.
Start the angles from the high and low end of the square’s range.
Then move out in time and do the same to the right of the starting Then move out in time and do the same to the right of the starting price. higher and 90 time frames to the future. The angles at the end of higher and 90 time frames to the future. The angles at the end of
the square in time will be drawn back toward the beginning of the the square in time will be drawn back toward the beginning of the square. Now draw the midway point, which is 45 dollars up from the square. Now draw the midway point, which is 45 dollars up from the low. These angles should also be drawn from the midpoint in time.
low. These angles should also be drawn from the midpoint in time.
Do these both forward and back in time and price! Note: When Do these both forward and back in time and price! Note: When drawing the midpoint angles they must go up and down. Try to keep drawing the midpoint angles they must go up and down. Try to keep the square from being too cluttered with angles. Just use the 1x1 the square from being too cluttered with angles. Just use the 1x1 and the 1x2 going up and down.
and the 1x2 going up and down.
To get the 1/4
To get the 1/4thth divide 90 by 4 and we get 22.5. When we divide 90divide 90 by 4 and we get 22.5. When we divide 90 by 3 we ge
by 3 we get 30, which t 30, which are the are the thirds. If thirds. If your computer program your computer program hashas the capability of doing cycle lines, then it will be of great help the capability of doing cycle lines, then it will be of great help to you and save you a lot of work. Once again if you have to you and save you a lot of work. Once again if you have Market- Analyst,
Analyst, this this can can be be done done with with a a click click or or two two of of the the mouse. mouse. IfIf not, then draw the lines in by hand. Next, complete the square not, then draw the lines in by hand. Next, complete the square using the 1x1 and 1x2 angles.
using the 1x1 and 1x2 angles.
Chart 33 Chart 33
I have constructed Chart 33 using Market Analyst. Numbers 1 I have constructed Chart 33 using Market Analyst. Numbers 1 through 8 label the 1/8th increments of time in the square. Notice through 8 label the 1/8th increments of time in the square. Notice how 1/2 in price of the square stopped market price from advancing how 1/2 in price of the square stopped market price from advancing (the thick horizontal line) (note the minor top). Once price moves (the thick horizontal line) (note the minor top). Once price moves above 1/2 of the square, a significant barrier will have been above 1/2 of the square, a significant barrier will have been broken. Another
broken. Another area of inarea of interest is hterest is how price ow price stayed above stayed above the 1x1the 1x1 until just before the 1/4 in time. Once a low was made during the until just before the 1/4 in time. Once a low was made during the 1/4 time, price moved up to the 1x1 touched it three times and 1/4 time, price moved up to the 1x1 touched it three times and retraced down to the 1x2.
retraced down to the 1x2.
Price can be monitored for strength based on the angles. The 1x1 Price can be monitored for strength based on the angles. The 1x1 coming down from the top left corner of the square is important to coming down from the top left corner of the square is important to
watch.
watch. When When price price crossed crossed above above it it (at (at the the 2/3 2/3 time time frame), frame), it it isis in a strong position. If price moves above both 1x1 angles, expect in a strong position. If price moves above both 1x1 angles, expect an acceleration.
an acceleration.
Chart 34 Chart 34
Chart 34 illustrates the third square out in time from the Chart 34 illustrates the third square out in time from the originating time frame (STAR). The star is a major low on the originating time frame (STAR). The star is a major low on the Coffee chart. The three arrows are the end of the 1st, 2nd and 3rd Coffee chart. The three arrows are the end of the 1st, 2nd and 3rd square of 90 in time. Another significant point to mention is when square of 90 in time. Another significant point to mention is when the third square reached it's end in time, price moved up to the the third square reached it's end in time, price moved up to the end of
end of the forth the forth square of square of 90 in 90 in price. price. This is This is a great a great exampleexample on how to use the squares to find trend change. When the signs say on how to use the squares to find trend change. When the signs say it is time, then get ready to pull the trigger.
it is time, then get ready to pull the trigger.
Chart 35 is a
Chart 35 is a variablevariable square which can be used as a measuring square which can be used as a measuring device referencing major highs and lows of market swings and uses device referencing major highs and lows of market swings and uses the price. When doing these squares a trader will be transfixed at the price. When doing these squares a trader will be transfixed at the amazing relationship of numbers that Gann discovered. Chart 35 the amazing relationship of numbers that Gann discovered. Chart 35 is an example of a variable square in use on McDonalds Corp.
is an example of a variable square in use on McDonalds Corp.
Chart 35 Chart 35
The square referenced the April 12, 2013 high of 103.43. Using The square referenced the April 12, 2013 high of 103.43. Using this number as the square itself, we have some impressive results.
this number as the square itself, we have some impressive results.
The first arrow to the left shows price coming down off the high The first arrow to the left shows price coming down off the high and finding support at the end of the first square in price. The and finding support at the end of the first square in price. The low came in almost exactly at 103.43. The second arrow shows the low came in almost exactly at 103.43. The second arrow shows the end of the first square in time. The timing at the end of the end of the first square in time. The timing at the end of the third square (3rd arrow) was a very significant high. This time third square (3rd arrow) was a very significant high. This time frame was caught in the middle of a major topping cycle. This frame was caught in the middle of a major topping cycle. This
square overlay is what Gann relied on so much in the latter stage square overlay is what Gann relied on so much in the latter stage of his trading career. This is why he was so meticulous about the of his trading career. This is why he was so meticulous about the correct scaling and the angles being drawn from the key locations.
correct scaling and the angles being drawn from the key locations.
On Chart 36, I have constructed a static square of 90 on a Sugar On Chart 36, I have constructed a static square of 90 on a Sugar chart. Ninety days over in time doesn't necessarily mean that the chart. Ninety days over in time doesn't necessarily mean that the 1x1 will be 90 cents higher at the end of the square. This isn't 1x1 will be 90 cents higher at the end of the square. This isn't going to work because Sugar has never reached 90 cents. The going to work because Sugar has never reached 90 cents. The highest high I have on my charts is 60.05 cents made in 1974. That highest high I have on my charts is 60.05 cents made in 1974. That said, this is a perfect setup for a square of 60 off that high.
said, this is a perfect setup for a square of 60 off that high.
Chart
Chart 36 is 36 is compressed compressed so you so you can can see how see how the the number number 60.05 60.05 isis harmonic out to the sixth square. Price made a significant top at harmonic out to the sixth square. Price made a significant top at that time frame and continued its downward trend. How many squares that time frame and continued its downward trend. How many squares of 60.05 should be watched? In Chart 36 we find 6, which is 1/10th of 60.05 should be watched? In Chart 36 we find 6, which is 1/10th of 60. Therefore keep an eye out on the 12th, 18th, 24th, etc;
of 60. Therefore keep an eye out on the 12th, 18th, 24th, etc;
This can be days, weeks and months. Since 1974 is many months back This can be days, weeks and months. Since 1974 is many months back in time, I would keep a close watch on the monthly charts. The in time, I would keep a close watch on the monthly charts. The monthly
monthly sugar sugar chart chart below below shows shows the the truth truth of of these these harmonics. harmonics. InIn November
November of of 1980 1980 which which was was exactly exactly 72 72 months months (6 (6 years) years) out, out, therethere was a major top in sugar.
was a major top in sugar.
Chart 36 is using the variable square of 60.05 off the Nov 20, Chart 36 is using the variable square of 60.05 off the Nov 20, 1974 high in Sugar.
1974 high in Sugar.
Chart 36 Chart 36
The arrow to the left is the beginning of the square of 60.05 and The arrow to the left is the beginning of the square of 60.05 and the arrow to the right is the third square out in time. The third the arrow to the right is the third square out in time. The third square yields very good results by putting in a significant top.
square yields very good results by putting in a significant top.
Since the number three is harmonic with 60 all 1/3rds should be Since the number three is harmonic with 60 all 1/3rds should be watched
watched carefully. carefully. Using Using Market Market Analyst Analyst Software, Software, makes makes this this typetype of analysis easy and accurate.
of analysis easy and accurate.