| To analyse in price alone can certainly give a successful perspective. However, the addition of time studies adds another perspective to our analysis. Most would be familiar that we can see price reaction at certain levels. The 50% level being the “danger zone” that Gann talked so much about. It is important to realise though that not only can price react at these levels but so can our measurements in time.
In the chart below I have measured the run from 21st November to the 6th January (note that this time frame is calendar days not trading days). This time frame was 46 days, 50% of that time frame is 23 days. This is marked at point 1, the market was retracing and at this time frame made a strong reversal when it found the eventual high at point 2, 23 days later or a 100% point in time.
Seeing that this time frame has some significance, looking out another 23 days in time we see point 3. RIO price action performed a 2 day reversal and then continued to move lower through that point 3, suggesting some potential weakness. You should treat percentages in time the same way you would when analysing price. The basic premise is the same. If the market can hold above or below these points then support or resistance in time is in play in the same way it would be with price.
|