How to Profit From Applied Gann & Fibonacci The Definitive Guide to Market Geometry Space & Time By Gene Nowell Copyright © 2013 Gene Nowell All rights reserved. ISBN-10: 148398267X ISBN-13: 978-1483982670 CONTENTS Introduction 1 1 The Mysteries of Price & Time 3 2 Geometric Angles & Charts 9 3 Types of Charts 12 4 Constructing Fibonacci Fan Lines 21 5 Trading System or Trading Method 26 6 Gann Grid 36 7 360 Price Analysis 53 8 Square of 9 62 9 Harmonics in Numbers 66 10 Number Seven 77 11 Money Management 85 DEDICATION This book is dedicated to the wonderful person who has been an inspiration in my life. One who's humor, good nature, wisdom; encouragement and love have always been there before I've had the need, my Mother. God rest her soul. INTRODUCTION Many of the studies in this book are focused on the application of angles and how they relate to previous market swing highs and lows and future points of price and time resistance. Some of these angles are from Gann's work, others are Fibonacci Fan Lines and some are my own techniques. Regardless of which ones they are, you will come to understand the significance of them and how you can use them in your every day trading. It makes no difference which time frame they are applied to, the principle and results are close to being the same. Some chart illustrations are from the Forex markets and others cover some of the traditionally traded markets like the S&P and Metals. When I was introduced to W.D. Gann, I studied everything I could get my hands on. Gann Courses, Books, Seminars, Radio Programs, Tools, Computer Programs etc; the more I studied, the more I realized the depth of Gann's work. However, most of it did not have the accuracy I was looking for. But there are a few techniques I have found to be quite accurate. I guess I am not smart enough to understand all of Gann's theories. It is my firm belief that W.D. Gann, at times, tapped into the depths of knowledge of the 4 universe that is unknown. Something like Edgar Cayce did when he went into his trances. Gann published a book called the MAGIC WORD. In this publication, he spoke of the importance of meditating and verbal communication so one could be in tune with the Harmonic Vibrations which he believed are the foundation of the universe. Unless a person pursues this avenue of the unknown they will most likely not comprehend all of Mr. Gann's Work. I am not one who has taken his work to that level but, I have taken the angle techniques he used and dissected them front to back, back to front, inside out and more and then discovered some other techniques that have a real significance in technical analysis. One of the most important pieces of knowledge I have acquired over the years is this: Support resistance is not always on the horizontal plane. It keeps changing based on where market price is in relationship to time. There is a dimension not seen on charts unless geometric angles are applied and I intend to make that dimension and the symmetry of markets very clear to you in this book. This is what I am all about and this is what the book is all about; ANGLES and making money. When I talked to a publisher in the Carolina's about writing this book, it was suggested that I include significant days of the week and month to watch for reports that may affect price movement in the Forex and other markets. Although this is very significant and should not be neglected, I have decided to exclude that information and in its place, discuss Money Management. This is a subject that has been talked about but seldom looked into thoroughly. Dr. Barry Burns is one of the few who has a section in his online courses which addresses the issue. He covers the major commodity markets like Grains, Financials and Metals. W.D. Gann gave important information about protecting your account equity and trading a certain number of contracts for the money in your account, but he did not expound on the types of contracts outside of the grains which can be traded. I will go in depth regarding contract size and money needed to trade and cover stop numbers and placement. 1 Gene Nowell Proper money management will be covered more thoroughly than most other publications. I believe this to be the KEY to successful trading. It must be used in every trade you make. I hold no responsibility for loss due to any adverse market conditions or any other reason. Simply put, one must take responsibility for their actions and not blame losses on conditions or "THEM/THEY/THOSE GUYS" and others. Next, I cover Gann and the fundamentals and then I get in depth on some of Gann's techniques. I cover today's news and how it affects the future. Included in this study I examine Gann's statement about how the fundamentals "CAST THEIR SHADOWS ON THE CHARTS" in advance of the news. You will see these shadows and how they fall on the charts. It is my intension to show you why Geometric Angles should be used when analyzing any market. Furthermore, it is especially beneficial to apply angles to Forex charts over other markets. The uninterrupted intra day data from Sunday night through Friday evening develops a foreground from which these geometric angles can be used as a roadmap to knowledge of market strength and weakness and ultimately profits. I will show angle analysis like never before. You will see an in depth study using Fibonacci Fan Lines and you will learn how to develop a successful trading plan using Fibonacci Fan Lines and Gann Angles along with my own proven methods and procedures. Some of 7 the material I reveal in this book has never been presented to the public before. 2 1- THE MYSTERIES OF PRICE & TIME Who is wise enough to tap into the depths of knowledge that our loving God employed when he created the universe? A perfect harmony of mathematics and beauty were put into motion to create the wonders of the Galaxies. This knowledge is far too great for any one man or any people to grasp. To say that a BANG started creation is folly. This is the same thing as saying one could take billions of letters and set a bomb off in the middle of them and expect to get a perfect library out of it all. That is harder to believe than to believe in a Creator who put all what we see in perfect balance. I am not trying to make a religious sermon out of this, but I am trying to put things in Perspective. A BANG does not create, it destroys. My point being, markets are part of the universe and a part of this creation. And market movement is a reflection of the forces in motion which all have a time and place to culminate. An in depth study of these relationships would take generations. Mr. W.D. Gann just scratched the surface of this knowledge when he began using angles on charts to recognize certain price patterns. Furthermore, he used the stars and planets as the foundation of his work. At the end of his life I am sure he said I regret now that I am coming to the conclusion of my life and that I am only now beginning to understand price & time and their relationship to the stars. There is a beginning and an end to everything. Let us take a step in the direction of wisdom to try and comprehend these relationships of mathematics and geometry so a beginning and end of trends can be identified. Sit back, relax and let's take a journey through the wonderful world of MARKET GEOMETRY SPACE & TIME. As the markets evolve on a minute by minute display of Geometric relationships, there is clear evidence of previous highs and lows relating to future points of support/resistance and timing. It must be understood that each new swing that is formed has a relationship of previous swings regardless of how insignificant they may appear. To make this point more easily understood, let us consider the following example; Picture a pond in your mind's eye! Now throw a stone into the pond and notice the ripple effect this stone has created on the water's surface. Each wave that moves out from the center is energy and this energy has an effect somewhere in time. These energy waves are the forces that create market high and low at swing points. If you throw a larger stone into the pond, a much greater set of waves will go out from the impact point. Thus significant waves create longer lasting effects in the future and can also go higher from the surface than the effect of a smaller stone. This would be the amplitude effect of price on the wave. With that said, we now look for support resistance in the future. This price support/resistance is not always on the horizontal plane. It is however, always on an angular plane. These planes are in direct relationship to previous referenced swings. This is how the geometric angles come into play. They relate to the waves of the past to show the geometry of support/resistance in the future. The charts displayed in this book have geometric angles which originate from these previous swings (waves) and project out into the future for use as support/resistance and timing. The TIMING POINTS are derived from the termination of an angle at strategic locations on the chart. One of the key factors of this analysis is to know which angle will offer significant support/resistance. 3 Gene Nowell Another significant use of these angles is to use them as an indication of market strength and weakness. When price moves up and down on the charts, we will be able to know the strength of the current trend and can have an 11 indication if the next new high in the trend will be the last before price moves in the opposite direction. These and many more trading strategies will be found in this book, MARKET GEOMETRY SPACE & TIME. Please explore my website: www.gannline.com and check out the dates projected and the videos that explain the products I use to obtain these targets. FOUNDATIONS & WORDS FROM W.D. GANN Speculation or investment is the best business in the world if you make a business of it. But in order to make a success of it, you must study, be prepared, not guess, not follow inside information or depend on hope or fear. If you do, you will fail. Your success depends on knowing the right kind of rules and following them. Gann said, "Keep this well in mind, For Stocks or Commodities to show up trend and continue to advance, they must make higher bottoms and higher tops. When the trend is down, they must make lower tops and lower bottoms and continue on down to lower levels. But remember, prices can move in a narrow trading range for weeks, Months or even years, and not make a new high or a new low. But, after a long period of time when Stocks and Commodities break into new lows, they indicate much lower prices. And after a long period of time when they advance above old highs or old tops, they are in a stronger position and indicate higher prices. This is the reason why you must have a chart which goes a long way back, in order to see just what position a Stock or Commodity is in, and at what stage it is between extreme high and extreme low. You will go broke trading on hope and fear. You will never succeed buying or selling when you hope the market is going up or down. You will never succeed by making a trade because you fear the market is going up or down. Hope will ruin you, because it is nothing more than wishful thinking and provides no basis for action. Fear will often save you if you act quickly when you see that you are wrong. The fear of the market is the beginning of wisdom. Knowledge which can only be obtained by in depth study will help you to make a success. The more you study past records, the surer you are to be able to detect the trend of the future". There are a number of rules Gann used in his analysis with angles. Above all his rules was the use of correct charts. There are two types of charts that can be used for analysis. They are the Market Day chart which shows trading days. Then there are the Calendar day charts which encompass the entire calendar year and show all 365 days. Any type of chart with the posted High, Low and close will be fine because time and price is a measuring instrument and as long as they are uniform, an angular structure can be applied. When working with a market daily chart, the important thing is to set up all the data with no spaces for non-trading days like weekends or holidays. If you have the capability to set up a calendar day chart, you will find important timing points that are not shown on the market day chart. These must be laid out in the correct format. As long as the format is uniform, it will be sufficient for angles. OFFICIAL GANN CHART A Gann format chart, as shown below, features four, six, eight and sometimes ten squares to an inch. This brief look at the exact chart types Mr. Gann used himself is a familiar one to those of 4