ANZ and Time Frames

Nearly three weeks ago I had the pleasure of heading up to David Bowden’s property in Queensland. Certain aspects of my discussions with him at that time keep resonating in my mind when I consider the key starting points of trading. Price action / reaction, the study of swing charts and time frames were the three major areas that David focused on when he began and he maintained these skills throughout his years as a trader.

In Trading Tutors much has been covered on swing charts and price action. The study of basic time frames in our analysis is a very powerful tool. This is certainly represented in the market activity of ANZ. Those who attended the 2003 Annual Traders Conference worked on a practical example of ANZ using geometric angles and found out how profitable time tools can be. Looking at ANZ on a weekly chart we can see how applying basic time frames were very useful in calling turning points in the market.

The chart below is a weekly bar chart of ANZ. Using the interim time frame tool in the Video Series Software I have measured the time frame between the Sept 01 low (1) and the Jun 02 high (2). To see harmony in time frames you often have to expand your view on your market, in this case it's 39 weeks.

By then adding that time frame to point 3 - the next swing high, we now see the potential to call a future turning point in the market. The process requires the trader to analyse a major range in the market and calculate the time frame over which it occurs.

We can then identify if the time frame is in “harmony” with the market’s current movements. In this case it signalled the week ending the June 11, 2003 as a potential turning point. ANZ reached its high of 2003 in this week on the 11th.

Using the same time frame you can now reference from other significant points on the chart.

In the chart below I added the same time frame to point 4. It signalled the week ending the November 12 2003 as a future potential turning point. Low and behold, the next major low for 2003 was formed in that week.

Adding the same time frame to the high of 2003 - point 5, we gain an indication of where the next major turning point on ANZ may fall. The week ending March 5, is the next area I will be watching.

The time based tools that are used in Gann analysis are not to be used as a stand alone method of trading as a solid understanding of price trading goes hand in hand for any skilled traders. You can start to gain a greater perspective when you use these skills in combination with other tools. It will be interesting to watch over the coming weeks were ANZ is headed.

Good Trading

Aaron Lynch