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It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. Henry Ford


Those who surrender freedom for security will not have, nor do they deserve, either one. Benjamin Franklin
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The idea that you know what is true is dangerous, for it keeps you imprisoned in the mind. It is when you do not know, that you are free to investigate. ~ Nisargadatta Maharaj


Tuesday 2 March 2010

Dow -square of the range


I have drawn a square of the bull range.This may look confusing but is really just a way of representing geometrical relationships between price and time.The horizontal grid lines represent 1/8 divisions of the price range and the vertical ones do the same for time.As always 50% is the most important,and also the the 3/8 and 5/8 which correlate. to 0.382 and 0.618% fibonacci levels.The diagonals represent the natural geometric angles thrown up by the market's range.These can be thought of as natural trendlines .I have highlighted some of the more important lines in red and I have projected the square forward from the high.The more "hits" we have in terms of turns happening at divisions of the square the more confident we can be that it is valid.It is clear that the rising wedge pattern is well defined by 2 of the dominant angles,so these angles seem to be working.The high came in on 45 weeks,one of Gann's important cycles and we are now at 52 weeks,the cycle of 1 year and finding resistance from the falling 26 degree line.I have drawn a parallel rising support angle from the recent low and we could watch closely to see whether the 1 year cycle causes a reversal below this and below the 1/8 price division to trigger a sell signal.

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