About Gann Boxes and Squares

Last modified 15:09, 5 Nov 2012

sitmicon34.gifThis content is provided in support of the Safety in the Market (SITM) module for Your SOFTWARE and may not be applicable to your package. For more information, go to the Modules topic of this help.

About Gann Boxes and Squares

The Gann 2 tab contains a number of drawing tools that calculate and apply other Gann techniques to the current chart. In particular, tools that use Gann Boxes and Gann Squares are included on this tabbed page.

The drawing tools on the previous tabbed page (Gann) measured time sequences and assisted in the comparison of different market cycles. The tools on the Gann 2 tabbed page extend the time measurement principles into what Gann called the third dimension, to combine time and price measurement, or comparison, of one market cycle with another.

All boxes and squares are generally measured and plotted on charts displaying calendar days.

Types of Time and Price Tools

There are two methodologies involved:

  • Gann Boxes allow the user to set the time and the price range for a previous trading cycle that we expect to repeat.
  • Gann Squares require that the relationship of time to price be 1:1, hence the name “square”.

Gann Squares are in turn divided into two groups:

  • Natural Squares are sequences which occur in nature and were recognized by W.D. Gann as being especially relevant to market cycle analysis. These sequences included 52, 90, 144,168, etc.
  • Market Squares are user defined squares for individual markets or securities. For long market analysis, their price level is set at the lowest low of the market and the time is set at the same number of calendar days, i.e. the market is squared. An example of this is the 458 Square which is specifically designed for use with the SPI contract whose lowest historical low was 458 on 1 March 1983.

Initial Position and Extension over Future Price Formations

Gann Boxes are drawn from an initial point and stretched across a price cycle, and then copied and pasted over similar price formations in the market. The Gann Square drawing tool also has this ability, but the other Gann square tools do not.

Gann Square tools of both Natural and Market types draw 1:1 squares from the initial point selected by the user. The size is determined by the type of Square, e.g. 52, 144, 168, etc. or by the user selecting a range, e.g. Range Square or Preset Gann Square. In any event, the formation will be a 1:1 square and duplicate squares, arranged in rows and columns, can be set to be plotted on the chart. The extension by duplication of the original square allows the price analysis to be continued from the initial point up to the present day. Users can set the number of columns and rows of duplicated squares to be plotted in the properties dialog box.

Uses for Gann Boxes and Gann Squares

The primary use for both boxes and squares is to measure and detect recurring market patterns or price cycles.

When boxes are copied and pasted, and when the squares are replicated, the original scope of the box or square can be compared with future movements of the market.

The lines formed by the squares, as well as the lines drawn in the squares, form pressure points and lines of resistance.

The diagonal lines and interception points also provide market information indicating the strength or weakness of a market.

Long Market Analysis

For long markets the initial point for drawing Gann boxes or squares is the bottom of a significant low (and for market squares is the absolute historical bottom of the market), and the pitch of the diagonal showing the average points per day measures the strength of the market

Short Market Analysis

Likewise, short markets are measured with the initial point of the Gann box or square being positioned at the highest high, and the diagonal heading downwards to the next significant low will indicate the weakness of the market.

Gann 2 Drawing Tools

The following is a list of all tools available on the Gann 2 tab categorized into the above described groups:

Gann Box type tools

Transitional tools

Gann Square type tools

 Market Squares

Common Gann Square Functionality

Gann Squares share much functionality including positioning on charts, directional controls, extension by duplication and resistance and support line display controls.

Go to the Gann Squares - Common Properties topic to learn more.

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