Numerous articles and books have been written about WD Gann. I was fortunate to read some of his original writings in the 1990s. One of my colleagues was a member of the Gann Society, which paid a huge sum of money. I learned Gann and I have my own version of the Gann system. The most important statement I read from Gann is: “Time is the most important factor in analyzing and predicting market movements.” I couldn’t agree more. This article discusses how I trade Pivot Points using Fibonacci levels and Ganns Time vs. I will examine the Price version of the price.
The first points you need to find are what are known as swing points. A swing point is the last highest or lowest. There must be at least 8 large figures between them to be considered a moderate level of swing. The fewer point differences you can use, the less significant they are. Once you have identified one of these levels you will go to the left on the board (going back in time) to find the other. I will use the EUR / USD prices with the dates so that I can find what I am doing and apply the analysis. Looking at the latest price data (today’s date 09/01/27), we have a solo top made on December 18, 2008 at 1.4720 level. We turn left and find the lowest bass on October 27th and 28th at a double bottom made at 1.2330 level. Now we have swing points to work on. When using Fibonacci ratios we will find high levels of support and resistance. Then look for daily pivot points to see if too much theft occurs.
The formula for finding Fibonacci points is as follows. Take the highest to the highest and remove the lowest to find the widest low. 1.4720 – 1.2330 = 239 would be large figures. Fibonacci ratios.382, .618, .8200 (my ratio) are 1.382,1.618,2.236,2.618,3.618 Now we take the range and multiply the ratios..239 * .382 = .091298 Now we would take the highest High and remove Fibonacci that factor. So first aid level 1.4720-.0913 = 1.3807 Next support level.239 * .618 = .147702 1.4720-.1478 = 1.3242 Next level.239 * .8200 = .1964 1.4720-.1964 = 1.2756 (Carried in the back on January 23rd) low was 1.2765)
If you wish, you can continue to apply the remaining ratios. They will be good until you get the top out or make a new bass.
So when we have calculated these levels, we will set the daily pivot points to see if there is an overlap (for me the overlap is 33 points + or -), then I will give my time to the verse price lesson. Keep in mind that as these Fibonacci levels passed in the downward direction, these levels will equally act as resistance on the upward path. If they break they become help again. Let’s look at the formula for the pivot point and see how we apply it to the major Fibonacci levels.
I used the pivot point I was about to study while I was in the market (20+ years), and this formula was taught to me by a guy who was in Forex in 1976. As King Solomon said there is nothing new under the sun “The pivot point formula takes on new meaning when we have overlaps, with Fibonacci levels. They are much stronger to take advantage of reaction points. Here is the Formula:
We must first calculate the basic point. I calculate the pivot point of a daily bar because we are using daily data. (You can use it in any time frame, keep the time sequence uniform and I wouldn’t go for less than 30 minute bars) Formula pivot = High + Low + Close / 3 = x basic pivot
2x-high = support 2x-low = resistance
I am going to select today’s negotiation session. (Weekly bar daily) to calculate. 01/01/09 Open 1.2974 High 1.3205 Low 1.2860 Close 1.3135
1.3205 + 1.2860 + 1.3135 / 3 = base pivot 1.3066 2 * 1.3066-1.3205 = 1.2997 support level 1 2 * 1.3066-1.2860 = 1.3272 1. resistance level
Support Level 2 Basic Pivot – (R1-S1) 1.3066- (1.3272-1.2997) = 1.3066-.0275 = 1.2791 (very close to that Fib level) Support Level 3 low-2x (high base pivot) 1.2860-2x (1.3205 -1.3066) = 1.2860-2x.0139 = 1.2860-.0278 = 1.2582
2 resistance pivot + (R1-S1) 1.3066+ (1.3272-1.2997) = 1.3066 + .0275 = 1.3341 3 high resistance level + 2x (low pivot) 1.3205+ (1.3066-1.2860) = 1.3205 + .0206 = 1.3411
So these are our daily levels and the ones we would explain in the lists with the old Fibonacci support levels that have become your resistance level on the rise. Then how to negotiate these pivot points. Well, the rule is to have a long break at the top and shorten it at the break. It’s easier said than done, because they are very reactionary points, so you can market them back and forth several times, they cut you like them. To prevent this from happening, you need to give yourself a 35 pip stop loss (so if the market breaks up or down and stays above or below the pivot you need to stay longer or shorter than 12 minutes with a 35 point stop. You need experience Market Momentum- with.) This is where Gann’s version of the rules of verse pricing of time lies. You can continue using the hourly charts. I will describe how I negotiate these points. This is what is known as discretionary trading, and not a system to say the least. However, you can now work out your own rules for negotiating these points. My experience has shown me that if trading money moves fast, we are on the easy side of the market, and we will get out when the market moment starts to slow down. (I use the stop command.)
Let’s get into that; The data points that came into play for me make it through the Fibonacci Point Of 1.3242 lap with my daily 1.3272 point score. I would look at how the market reacts at these levels. I will write what is in the daily trading diary so you can see how I traded in the market today. It’s important that I have several primary systems that I market to. This is what I call the semi-trading system because it is discretionary. That is, it is the environment I am accustomed to; Since I traded in the interbank market for many years, it requires discretionary trading. markets. You should try this if you have a good trading experience. I still have tough and fast rules when it comes to discretionary trading. I will use today’s trading scenario. It would be the opposite if we negotiated the level of support. That’s what I call the 15-minute rule. I divide the 15-minute time into 3 five-minute frames. Your market tries to break the resistance level and fails. Level minus you sell 7-9 pip. (our level is 1.3242-9 pips) So you would sell 1.3233. You wait for the delay (the market backs down and you try to resist again) You sell the hold back, in a smaller amount than your base position. (usually 1/3 less; this is a pyramid. Always a pyramid with a smaller number.) Usually the back attachment will be a little higher (12-18 pip; not the rule I’ve seen.) market carefully. Wait another 5 minutes if the money is not (if you are losing) close the trade and go back.
9:15 AM EST Market 1.3242 Fib point tries to get the highest paid 1.3244. It can’t hold 3 euro units I sell at a price of 1.3231. I will make a pyramid that will go back to level 1.3250. I have more than 39 points S / L (1.3272 pivot level over 1.3281) Earn earnings level 1.3130. The market closes at the five-minute bar at 1.3239. At 9:20 the market is trying to hit the 1.3244 high and cannot exceed the 1.3238 bid I lost. I will not add at this time. The market closed at 1.3219. So far there has been no turning back. 9:25 We are in the money market somewhat in the short range, I will sell low at 1.3235 if I see 40 levels. the market closes at 1.3217 level on this bar. 9:30 Euros tries to figure 1.32 and pays quickly. It closes again at the 1.3215 level. The market is confused and can go any way at the moment, if we don’t get above 1.3258, I think we can still get into the 1.3150 value zone. 9:35 Euro 1.32 tries to break the 35 level and is quickly discarded I sell small (1 unit) at a price of 1.3224. I’m not happy with that sale. I wanted to get higher. It is closing at a high of 1.3227. I can’t add up, even if I’m at level 35 at the moment, with my stop. 9:40 Euro tries again at 30 level and fails 3 times, we close 1.3215 9:45 narrow trade trade 1.3215 1.3230 9:50 Still narrow market trade 1.3211-1.3231 9:55 We finally break the figure and close at 1.3195.
10:00 We break at the end station at level 1.3140.
10:15 The market pulls me out to the number 1.3153.
So that’s how I trade pivot points. As you can read from above, I never backed down, I was a little taken care of, because experience has shown me that the longer I stay, the more time I have, the more chances I have to test the next level of 1.3272.
My perfect trade in 1.3240 would be to sell the first resistance, lower the market to 1.3208 and then return to the 1.3260 level, I would sell it again. Then quickly crash to the 1.3160 level. Everything in 20 minutes. Trades like this happen often, if you have to look for what you have (you do it now). Today, however, the market has worked in exchange for my money. Animo Tom