Gann Squares Grid from High and Low on SP 500

Oct 22, 2009: 10:14 PM CST

Here’s a little advanced analysis, or at least an example of “chart art” using Gann Squares (Square of 9) to show the Gann Lines both from the 1,576 high (first chart) and upwards off the 667 lows (second chart).

Let’s take a look and I’ll give a quick explanation of each chart.

First, we’ll start the Gann Squares of 9 Lines from the 1,576 high, which would be used if you assume we are still in a Bear Market and will find overhead resistance.

You’ll need to click to see the full-size image.

The Gann Square of 9 grids come with some charting programs, and can be drawn by hand in others.

The main idea when drawing Gann Grids from highs is to note each ‘node’ or ‘square out’ that is derived from a price swing high.  In this case, the grid starts with 1,576, the October 2007 high.

These grids are not meant for trade set-ups, but Gann described them as “vibration” levels, which would be important if other factors (for us, that means momentum divergences, Fibonacci retracements, or overbought/oversold indicators) corresponded with a Gann square price target as shown above.

I find it interesting that each of the last three swing highs in succession ‘stopped’ at a Gann Square number (as shown on the right).

Even more interesting, the Head and Shoulders (failed) pattern seemed to form (or be trapped) between two Gann lines.

The current upper Gann node rests at 1,102, with the current high (so far) being just over 1,101.  The node above that is 1,135.

If you believe this is a new bull market, then you would use the 667 low as the starting point, which gives us the following “upwards” grid:


Click for full-size image

Same logic as above, only these grid lines are just slightly higher (about 8 points each) than those that originate from the 1,576 high.

In general, one would use Gann lines up off a low to find resistance and Gann lines down from a high to find support.  That’s why I’m showing two different grids with dissimilar results.

Remember, look for other factors (candles, divergences, overbought readings, etc) before making any decisions – do not trade off any one thing in isolation.

Again, this is just as a reference using an advanced indicator, and can be construed as one of my “Chart Art” posts, or to be filed under “Hmm, that’s interesting.”

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

7 Comments

7 Responses to “Gann Squares Grid from High and Low on SP 500”

  1. dumbpainter Says:

    John Lennon just rolled over in his grave 9 times.

  2. Corey Rosenbloom, CMT Says:

    Haha – I give you the award for the funniest comment!

    But why John Lennon? This post isn't that psychedelic, is it?

  3. dumbpainter Says:

    His old “number nine, number nine” Revolution 9 song with the Beatles…can you remember hearing that?

    Have you ever read about the sigma code, number 9 stuff from architectural theory? Cecil Balmond wrote about this a lot…wonder if that and some advanced Gann fan theory merged?

  4. Corey Rosenbloom, CMT Says:

    Ahhhh I remember.

    No, I've not read about that but will check it out. Mr. Gann had a wide variety of influences from what I can tell but I would consider myself an intermediate Gann person and just see it as one of many tools to use.

    There's no telling what I'll find out is connected the more I learn about it!

  5. Corey Rosenbloom, CMT Says:

    Ahhhh I remember.

    No, I've not read about that but will check it out. Mr. Gann had a wide variety of influences from what I can tell but I would consider myself an intermediate Gann person and just see it as one of many tools to use.

    There's no telling what I'll find out is connected the more I learn about it!

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