Saturday, 13 February 2010
S&P swing charts
One criticism of Gann analysis is that it can be too complicated or esoteric.We have all seen charts cluttered with too many Gann angles,retracement levels,square of nine levels,cycle projections etc
My view is that Gann can be as simple or complicated as you want to make it.At its most basic chart reading is about identifying trends,getting on board,and sticking with the trend.The swing chart is one of the best ways of doing this,and like p&f charts removes the noise from the chart.Swing charts also yield clear levels for stop placement.Gann's favourite chart for trading was reputedly the 2 day swing,which requires two consecutive lower highs or higher lows on the daily bar chart before the swing line can be drawn.Inside days are ignored.Marc Rivalland's book covers the construction of swing charts.
On the 2 day swing chart I have drawn in some natural Gann circle levels,720,900 and 1080 which the market seems to be respecting.
The 3 day swing chart shown here covers a longer time period.It would have kept you on the right side of the market in both the bear and bull phases.Unlike the 1 and 2 day charts it has not given a sell signal yet.It is less sensitive but less prone to whipsaw/false signals.You can see how sharply the market broke when multiple swing lows in the 1200-1240 area were broken.
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