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It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. Henry Ford


Those who surrender freedom for security will not have, nor do they deserve, either one. Benjamin Franklin
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The idea that you know what is true is dangerous, for it keeps you imprisoned in the mind. It is when you do not know, that you are free to investigate. ~ Nisargadatta Maharaj


Thursday 7 January 2010

Marks & Spencer - a natural Gann square



As I understand it a Gann square is basically a natural cycle represented by an overlay in the shape of the square,whose geometrical divisions represent potential support and resistance.144 is one such natural square that Gann is known to have used a lot,being the square of 12, but other numbers can be used like 45,90,180,360 or multiples thereof (based on the cycle of a year which is 360 degrees in Gann theory) .Numbers peculiar to an individual market based on its own trading history may also be used.The theory is that at the end of the square,when price and time are equal or in equilibrium the market is perfectly balanced and a change in trend will often occur.
Marks & Spencer had resistance at 400 based on a doubling of the low at 200 and a 38% retracement of the major range.The Elliot wave pattern also suggested a top.

The square of 144 overlay also suggested an imminent turning point as previous divisions had produced support and resistance (I have marked some with circles,such as the high around 385 which was the midpoint in time (72 days) and 75% in price (108 points).When the stock reached the end of the square (144 days) it fell sharply,gapping down, having just failed to reach the top of the square.

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