What are Gann Levels?
Gann Levels are the name that I give them but often referred as the "Square of 9"; a trading methodology in which W.D. Gann created sometime around 1902. Most of my research shows he was very successful in predicting future stock market movement. His prediction methods were based in Geometry, Astronomy and Ancient Mathematics. As you can imagine, one can easily accept the thought of using Geometry but Astronomy and Ancient Mathematics have brought many skeptics. My purpose will not be to reflect on the two latter but to introduce you to the Geometry portion as it relates to his "Gann Wheel". Gann used the circle, square and triangle for understanding a price and time relationship believing markets would react when time and price squared. Using this method, he could make future predictions of stock market movement well in advance.
My research on his calculations for at least squaring price and I have observed that markets do in fact react at these
levels...specifically intraday movement. It did take me a while to understand this part of his mathematics equation in which I give the credit to those that went before me and left a few clues.
Gann wrote and often spoke in ways that are difficult to understand when explaining his methods. It has been written many times that very few people truly understand all of his methods. However, there are many people claiming that they do. Who knows, maybe they do but I doubt it.
In the following pages I will show you some examples of price reacting to these levels in intraday price action on the Indices, Crude Oil and Gold. Obviously, if volatility is high, price will react but runs through these levels further than my risk allows. So this is not place a stop order on a line and think it will be profitable. The better approach is patience while look for entry points around these levels.
Remember, this is not an indicator of sorts but a mathematical approach to true support and resistance calculated from current price A leading indication that price will often react (meaning consolidate or reverse) at these levels.
You may have thought about this but these levels are static and have been the exact same since 1902 and before.