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In last month’s Safety in the Market Newsletter I discussed some of the work that helped me to call the 2007 yearly top on the US Dollar / Japanese Yen currency pair (FXUSJY in ProfitSource).
This month I will be looking at the August 15, 2008 top on the Dollar/Yen. This proved to be the yearly top on this market.
Chart 1 below shows that the 2008 yearly top came in on the 50% retracement level of the bear market range. Gann stresses that the 50% rule is so important and that we should always know where the half way points are.
Chart 1
click chart to enlarge
This was not the first time this market had made an important major top or bottom on a 50% milestone and neither was it the last!
In Chart 2 below we can see that the first range up from the March 2008 low of 95.76 was 12.83 (1283 points). The market pulled back and then tried to repeat this range, but failed at the 50% milestone. You can also see that this 1283 point range was very close in size to the First Range Out from the 2007 top of 1254 points. This number was present all the way throughout the market action of the last two and a half years.
Chart 2
click chart to enlarge
In Chart 3, the final upswing into the top failed at the 75% milestone of the previous range.
Chart 3
click chart to enlarge
You can see that the Price Forecast for this top was put together by using ranges of all different sizes, from yearly ranges down to daily ranges. They are all important.
Price Forecasting is taught in the Number One Trading Plan and is heavily focussed on during the Advanced Trader Coaching classes. In the October 2009 Advanced Trader Coaching class, we used Price Forecasting to call major turning points on several stocks.
The last technique I will cover for this top is using Geometric Angles. Chart 4 below shows that a 1x1 Angle from the August, 1998 top called a series of major tops in the market, including the 2008 top.
Chart 4
click chart to enlarge
Price was a major part of my work for this 2008 top however I also used Master Time Cycles, Time Frames, Squares and Anniversaries. I would encourage all Platinum students to apply all the techniques you have learnt from the Ultimate Gann Course to this top in the market and see what the market was telling you about this turning point.
As David says, “your hindsight will become your foresight IF used often enough.”
Be Prepared!
Mathew Barnes
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