Description of Amazon as "the river of no return" in the excellent Daily Reckoning have proved wide of the mark as Amazon looks to be one of the success stories from the dotcom era.Nevertheless after stellar performance in 2009 the stock has reached significant resistance,with time cycles aligning with price targets on the square of nine chart.This is one of Gann's more esoteric tools.Square of nine levels can be derived from a table or calculated.The low of 36 and the high of 144 are both significant Gann numbers,36 is the square of 6 and 144 is the square of 12.Effectively the square of 9 is a calculator that relates numbers to each other by taking their square root,incrementing by 1,2,3,4 etc and re-squaring.Some traders use increments of 0.5,0.618,1.618 etc.When price targets align with cycles such as 3 months (90 degrees in time ) 4 months,6 months ,1 year (360 degrees) and other natural divisions of the year,resistance is indicated.
Squares are significant resistance (or support)in their own right - witness the recent high in gold at 1225,which is the square of 35. This can be applied to time as well eg 25 weeks,144 weeks etc.
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