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I’m writing this article having just completed another 3 day Gann Mastery Workshop where we put together a forecast for the US Dollar / Japanese Yen currency pair (FXUSJY in ProfitSource).
We were looking specifically at a pressure date for February that may well prove to be a major turning point on this market for this year.
While it wouldn’t be fair to the students in the class for me to go into the details of the forecast here, I thought it would be a good idea to go back and have a look at another Classic Gann Setup – the 2007 yearly top.
During your trading education it is helpful to look at as many examples of major turning points as you can, applying the techniques in your tool belt to discover just why a major top or a major bottom occurred when it did.
David Bowden says that “your hindsight will become your foresight – IF used often enough.” David is saying that in order to predict turning points in advance, you must be able to see how previous turns unfolded in hindsight first. When you have seen enough of these in hindsight, you will be able to see them come together as they happen and then eventually, see them before they happen.
Chart 1 below shows the June 22nd, 2007 Yearly Top on the Dollar/Yen. From this top, the Dollar Yen commenced a significant bear market lasting over two years.
Chart 1
click chart to enlarge
In Chart 2 below, we can see that this top came in on the 50% retracement level of a major range.
Chart 2
click chart to enlarge
In Chart 3 we can see that this pressure point also lined up with the 75% milestone on the major cyclical range. David says in Section 11 of the Number One Trading Plan "It is from yearly or seasonal ranges that you get the ability to call the big moves. There is no other way."
Chart 3
click chart to enlarge
This is not the first time the 75% milestone has signalled the end of a bull market on the Dollar/Yen, nor will it be the last.
On the small picture, the last section of the market leading into the 2007 top was all called based on the First Range Out of 335 points from the March, 2007 low. This range of 335 points can be seen 4 times during the run up, concluding with a 338 point range right into the top. This is shown in Chart 4 below.
Chart 4
click chart to enlarge
What I have shown you in this article so far is only the beginning. Any Safety in the Market student with the Number One Trading Plan should be able to put this work together.
I would encourage all Safety in the Market students to recreate the charts in the article, using the Gann Retracement Tool and the ABC Pressure Points Tool in ProfitSource.
Then, apply the other techniques you have learned in your education. All Platinum students should be able to add in second dimension Time analysis techniques and third dimension techniques as well.
See the top come in hindsight – then look to make your hindsight your foresight!
The 2007 top is one I was ready for and most importantly, traded live and made money from!
In my next Safety in the Market Monthly Newsletter article I will put together the 2008 yearly top, another top I saw coming and traded. If you are keen, I would encourage you to have a go at working out the 2008 top before I write an article about it.
Be Prepared!
Mathew Barnes
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