HISTORY REPEATS TIME
In this lesson we will look at how repeating time cycles can be measured with Trading Days. Gann believed that history repeats. He did more than believe. He made sizeable profits based on his ability to find repeating cycles. Read what he says about time cycles: WHY TIME CYCLES PREDICT TREND OF COMMODITIES, STOCKS AND BUSINESS After fifty-two years of experience and research going back hundreds of years, I have proved to my entire satisfaction that history repeats and that when we know the past, we can determine the future of prices. I have put TIME CYCLES to the test in my personal trading, and I have issued Annual Forecasts on Stocks and Commodities for more than 50 years which have proved accurate. There are several ways we can measure time cycles in the markets. The simplest one of these is to count trading bars between tops and bottoms. For example if a bottom happened Monday and a top on Friday the same week, you would say the up move lasted four days: Tuesday is the first day of the move and Friday is the fourth (last) day of the move. Of course these moves can go much longer than four days and it is the Gann Traders skill that will pick up repeating cycles and profit from them. Continuing our example on Wheat futures for the same period let us look at the number of trading days from the top to the bottom and from the bottom to the top. The table below is taken from continuous Wheat chart (three day swing chart). The whole table and chart goes back to 1959 and we included 2006 onwards to keep the exercise brief. Have a look on where moves of five trading bars have repeated. We have highlighted these numbers to make it easy for you. Date Top/Bottom 29/12/2005 Top 18/01/2006 9/02/2006 14/02/2006 28/02/2006 28/03/2006 23/05/2006 16/06/2006 21/06/2006 26/06/2006 11/07/2006 26/07/2006 3/08/2006 14/08/2006 5/09/2006 Bottom Top Bottom Top Bottom Top Bottom Top Bottom Top Bottom Top Bottom Top Move in Trading Days 27 12 16 3 9 20 39 17 3 3 10 11 6 7 15
15/09/2006 17/10/2006 23/10/2006 25/10/2006 14/11/2006 27/11/2006 13/12/2006 26/12/2006 10/01/2007 26/02/2007 2/04/2007 26/04/2007 22/05/2007 29/06/2007 3/07/2007 26/07/2007 1/08/2007 28/09/2007 16/10/2007 23/10/2007 5/11/2007 7/11/2007 14/11/2007 17/12/2007 10/01/2008 11/02/2008 13/02/2008 27/02/2008 11/04/2008 17/04/2008 1/05/2008 8/05/2008 15/05/2008 20/05/2008 29/05/2008 18/06/2008 23/06/2008 27/06/2008
Bottom Top Bottom Top Bottom Top Bottom Top Bottom Top Bottom Top Bottom Top Bottom Top Bottom Top Bottom Top Bottom Top Bottom Top Bottom Top Bottom Top Bottom Top Bottom Top Bottom Top Bottom Top Bottom Top
8 22 4 2 14 8 12 8 10 31 25 17 18 27 2 16 4 41 12 5 9 2 5 22 16 21 2 9 31 4 10 5 5 3 6 14 3 4
5/08/2008 21/08/2008 24/10/2008 4/11/2008 21/11/2008 28/11/2008 5/12/2008 6/01/2009 4/02/2009 9/02/2009 3/03/2009 23/03/2009 30/03/2009 6/04/2009 20/04/2009 13/05/2009 18/05/2009 1/06/2009 30/06/2009
Bottom Top Bottom Top Bottom Top Bottom Top Bottom Top Bottom Top Bottom Top Bottom Top Bottom Top Bottom
26 12 45 7 13 4 5 20 20 3 15 14 5 5 9 17 3 9 21
Have a good look at this table and see if you are able to find other repeating ranges. We will give you the answers in the next lesson. What we covered in this lesson is that markets make predictable moves between tops and bottoms on a regular basis. By measuring these cycles in Trading Days you can time your entries and exits and pick turns in the markets. In last lesson we talked about repeating Price Ranges and asked you to find other repeating numbers. Here is what else you may have picked up: 25.00, 25.50, 25.50 37.00, 37.50, 38.00, 38.00 61.50, 62.00, 62.00 74.00, 75.00, 75.00, 76.00 95.00, 96.0, 97.00 See you at the next lesson...