For most traders, time is the most difficult dimension of market activity to anticipate. Yet, time is a critical factor in our market analysis. If we are able to enter and exit a trade at the right time, we are able to take all the gain or profit that is available from any market movement regardless of the extent of the price move. That is the best that can be done.
W. D. Gann recognized the importance of time cycles or the time factor as he called it for trading analysis. As with price, he recognized that a market unfolds in proportion to prior cycles, just as a crystalline
structure unfolds in well defined, predictable structure and proportion. Unfortunately, Mr. Gann once again did not describe which proportion (ratio) or which previous time cycle a current market is "working out in relation to."
Price and time are the effects of the same cause. Time = Price or as
W. D. Gann said: "When time and price square, change is inevitable." A well accepted and implemented method of price projection in market analysis is to use the Fibonacci, dynamic, growth ratios of .382, -618, 1.618, etc. Yet, the same analysts will use static, fixed length and equal division ratios for time analysis. This reflects a lack of under- standing of the equality of time and price and that time and price are the effects of the same past causes.
If time and price are the effects of the same cause, the same techniques used for price analysis should be applicable to time analysis-
There are two methods of dynamic time analysis: Time Cycle Ratios and Time Rhythm Zones. Each complements the other. Time Rhythm Zones projects a broad period with a very high probability of trend change. Time Cycle Ratio projections are very narrow time zones of just a few days from where most trend changes lake place. When the Time Cycle Ratio period coincides with the Time Rhythm Zone period, the odds increase for trend change.
Each of the two methods arc dynamic in that they adjust for recent market activity. Each method is a leading indicator in that the time projections are made well in advance in the same manner as the price projections,
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If time and price are the effects of the same cause, the same techniques used for price analysis should be applicable to time analysis.
Time Cycle Ratios
Prior time cycles are proportioned and extended forward in time in the same manner as price cycles are proportioned for retracement, alternate cycle and extension. The general term I use few this method of time analysis is Time Cycle Ratios™ (TCR).
The time of change will occur at a "cluster" of important ratio relation- ships of past cycles all falling within a narrow time zone, usually of 2-5 days, with intermediate term swings and often as little as 2-5 hours with short-term swings, I call these projected time clusters a Projected Turning Point Period™ (PTPP), Projected Turning Point Periods should be viewed as periods of change when energy enters or exits the system (market). If the market is in balance (consolidation, trading range), price will frequently begin a break-out of the trading range at a Projected Turning Point Period (energy entering a balanced system). If a market is trending into a PTPP, a trend reversal is likely.
Projected Turning Point Periods should be considered in the same manner as projected price zones. Each represents a high probability zone of support or resistance. PTPPs are lime support or resistance zones.
Time Cycle Ratio™ Projections
Time projections are done in exactly the same manner as price projections. A prior time cycle is proportioned and projected forward from the end of the cycle or from an alternate cycle pivot just as we do with price. It is important that traders learn the terminology and labels for the time projections in order to be able to quickly recognized what is being described on the charts and time projection reports.
The time between any pair of pivots can be measured, proportioned and projections made. However, there arc a few awing relationships in time that are the most important for projecting future dates with a high probability of trend change. First, I will describe the individual TCR methods. We will then see how they are combined to project future time zones called Projected Turning Point Periods™ that have a high
Time Retracements (TR)
A Time Retracement is the same as a price retracement. It is the amount of time that a market moves counter to the prior trend. As a market advances or declines, there will be more than one prior swing extreme from where to measure time retracements. In other words, we will have two or more degrees of retracement to consider.
Time Retracements are projected in the same manner as price retracements. The lime range of A to B is measured, proportioned and
projected forward from B to calculate time retracements. As long as price is declining away from the swing high at B, the lime retracements are potential periods for a low.
Time Retracement ratios are similar to those used for Price Retracements: Note that 78.6%, a ratio that is very important for
price retracemcnts, is usually not important for time retracement. 38.2%, 50%, 61.8%, 100%, 162%, 200%, 262%.
ment in the same manner as the highs and lows are made at or very near price retracements. The March 2. 1994 low in gold was made just one day prior to the 50% retracement in time of the rally from the Sept. 13, 1993 low to Jan. 5, 1994 high. The April 22 low was made one week prior to the
100% time retracement.
The chart below appears to have many days with no bars. It is a calendar
day chart which includes spaces for all non-trading.
How The TCRs Are Labeled On The Chart
TCR (Time Cycle Ratio) projections involve two or three pivots. The time period between two pivots is proportioned and the projections are made from the second point. The TCR label is always placed at the second date from where the projections are made. In the illustration above, the time period from the Sept. 13 low to the Jan. 5 high is multiplied by 50% and
100% and the product is counted forward front the second date, Jan. 5. You can see the TCR label below the Jan. 5 date which indicates the projection was made from Jan. 5.
Alternate Time Cycle Ratio projections involve three pivots. They will be described and illustrated later in the chapter.
Calendar Days Verses Trading Days
There will be little difference to the projected dates whether calendar or trading days are used. Keep in mind that we are proportioning a period of time and projecting forward the proportion of time. We are not making static counts.
The gold chart on the previous page shows the 50% and 100% Time Cycle Ratios by trading and calendar day counts. The TD and CD time retracements are only one day different in each case.
The 50% time retracement is only one day different whether counting forward 39 trading days or 57 calendar days from Jan. 5,1994. The ratio of trading days to calendar days of any time period will be about 70% or 5/7, Trading day and calendar day projected dates will only be different by
1-3 days depending on the length of the period projected forward and how many non-trading days there are in the elapsed period to the projected date. TCRs should be done by calendar clays for the most accurate results.