SP500 Gann and Andrews Picthfork Updated Chart Art
I wanted to share another “Chart Art” post using two advanced technical (charting) methods on the S&P 500, which has been containing the recent rally quite nicely within its bounds.
Let’s take an updated look at the Gann “Square of Nine” trendlines and the default Andrews Pitchfork Tool:
(You’ll need to click for full-size image)
Without getting into the mechanics behind the lines, I’m using two ‘advanced’ charting tools, one of which is default in most charting platforms.
This is the same Andrews Pitchfork ‘auto’ trendline tool starting with the November 2009 low to the January 2009 swing high and then connecting the pitchfork to the March 2009 low.
The detaulf Pitchfork tool draws the outer lines as well as the “50% Midpoint” line, though I’ve added the Fibonacci percentages of 38.2% and 61.8%, as well as divided the grid into quarters, by adding 25% and 75%.
I’ve posted previously on this and other uses for the tool in:
Feb 25: “Dollar Index Rides the Trendlines Higher”
Jan. 15: “Why the 1,150 Level is Important Resistance to Watch”
Dec 7 (’09): “Broken Andrews Pitchfork Grid on Crude Oil”
Nov 24 (’09): “Interesting Convergence to Watch at 10,500 on Dow Jones”
Nov 5 (’09): “Andrews Pitchfork Bounce for the SP500″
Oct. 18 (’09): “Quick Andrews Pitchfork Update on the Dollar Index”
Oct 19 (’09): “Andrews Pitchfork Update on the SP500”
as well as:
July 28th S&P 500 Update (showing the Fibonacci numbers for the Pitchfork which are still valid)
June 18th on the S&P 500 (which show the ’standard’ Andrews Tool)
May 13th S&P 500 which shows a Downward Pitchfork from the Market Highs
Beyond the Pitchfork tool, I’m showing the derived Gann Square of Nine trendlines starting with the March 2009 low of 666.
What we want to find are convergences in the trendlines and the Andrews Tool, and to notice how price has reacted to in the past to these levels.
These tools both have found ‘hidden’ support and resistance levels – as well as a comfortable trend channel – all the way up. I find that fascinating.
Here are a few prior posts on the past Gann Squares (Trendline) Levels:
December 17 (’09): Gann Line and Volume Update on SP500
October 22 (’09): Gann Trendline Reference Grid from High and Low on SP500
To me, these charts are better filed under the “Hmm, that’s interesting” category rather than the “Rush out and make a trading decision based on a single trendline” category.
If anything, it broadens your awareness that there are other techniques used by the technical (charting) trading community that don’t make their way into the general public very often.
Corey Rosenbloom, CMT
Afraid to Trade.com
Follow Corey on Twitter: http://twitter.com/afraidtotrade
Interesting stuff… I've read about Gann from Constance Brown's books, but it always seems a bit esoteric and unhelpful (like you said, “hmm interesting” but not really actionable per se).
That said, Gann is interesting to me, and I'm curious where you have studied Gann methods (if you don't mind sharing).
My first professional exposure to Gann – other than prior curiosity – was through Connie Brown's “TA for the Trading Professional” book for the CMT coursework and then trained with a private mentor, James Bartelloni CMT, for some of the advanced methods.
It's all very fascinating to me, especially how price has respected these levels all the way up, but I'm still a confluence style trader/analyst where I'm trying to put the total picture together to make trading decisions. These advanced methods are only one piece of the puzzle.
I agree – it is fascinating, and fun to play with these methods.
However, we also need to keep in mind the old adage…. draw enough lines on a chart and price is bound to hit some of them. That's something I like to remind myself of from time to time. 😉
How could someone play all those lines?
The main idea is that if price breaks above one horizontal line, then it is expected to move up to the next line as a target. And once it breaks that line, up to the next – so and and so forth. It's mainly for intraday and/or swing traders.
I agree – it is fascinating, and fun to play with these methods.
However, we also need to keep in mind the old adage…. draw enough lines on a chart and price is bound to hit some of them. That's something I like to remind myself of from time to time. 😉
How could someone play all those lines?
The main idea is that if price breaks above one horizontal line, then it is expected to move up to the next line as a target. And once it breaks that line, up to the next – so and and so forth. It's mainly for intraday and/or swing traders.