W D Gann and the Lunar Eclipse

Did you say eclipse? I hear that question quite a bit.  No, I said ellipse, pronounced E-Lips.  What is an ellipse?  It is a tool that we use to measure pullbacks.  When markets trend, they pullback in various ways.  We use the ellipse to measure where that pullback may end both in TIME and in PRICE.  If you know where something might end AND you can identify a decent risk reward then you are staring in the eyes of an opportunity.  The yellow oval shaped ellipse in the chart of the Banking Index ($BKX) below shows that the pullback in the ($BKX) may be exhausted here.  The next target on the ($BKX) is $40.  The target on Citibank (C) is $10. 

The ellipse is based on time and price squaring.  W D Gann taught courses on time and price squaring.  I am told that if Gann was still teaching his courses, they would cost $30,000 in today's dollars.  Remember, sometimes these corrections can be a little more complicated.  This is spelled out very succinctly in Duane's post from August 13th of last year. 

The $BKX and many of its components show good risk reward here to the downside.  If you decide to take this trade remember to size your position and manage your risk as you would in any other trade.

Have a plan, follow the rules and focus on process as opposed to outcome.

A trade is a trade is a trade.

Joel Stahl

Comments

[max]

hi
How do you find the first point to trace the ellipse Without using elliott?

[Craig]

Max the ellipse can be draw from pivot to pivot. One of the easiest ways to use it is turn on the pivot study in GET and only use major or primary pivots. If (as in this case) you were doing a GET stochastic trade you would go back and find the last place the stochastic was overbought and use that as a starting pivot.