Noel Campbell
Noel Campbell 		This week’s article will be a bonus for those who are embarking on the journey that is learning how to trade the markets using the techniques of W.D. Gann. While knowing how to trade price is an essential skill for Gann students, the true pot of gold at the end of the rainbow lies with understanding how to use time.

Gann states in his teachings, that you can treat time and price as the same thing. There is a far greater depth to that statement than is immediately obvious in its simplicity. Gann also advocates that if this statement were not true, then you could not square time and price.

When we say you can treat time and price as the same thing the first thing to understand is that many of the fundamental ways of price analysis can be applied to the study of time. One thing taught in the Smarter Starter Pack is to watch for a market to retrace 50% of the A to B range. You then also look for this range to repeat as the market moves away from Point C. I will investigate what this implies in the form of a recent example on the SPI200.

The SPI200 is showing signs of having reached a top of some significance. Potentially more significant than any we have seen since the March 2003 low. What could have helped you call this top? This is where your understanding of how to analyse time in the same method you would price, stands out.

Chart 1 shows recent market action on the SPI200 leading into the July top and the subsequent market action. The market had made a significant intermediate range from February 5 low (3242) to the April 6 high (3486). This range was 244 points in 61 days. The subsequent intermediate low was on May 11 at 3332.


Chart 1

click chart for more detail

Students of price would should know to add the previous range of 244 points to this May low to give price targets for the next top. Therefore, 3332 + 244 points gives us a price target of 3576. We are basically adding our A to B reference range onto Point C. Now this is where knowing that you can treat time and price in the same way holds tremendous value. Why not add the size of A to B reference range in terms of time to our Point C?

By adding the 61 days of the previous range onto the May 11 low we calculate the 100% time target to be July 11. The all-time high in July came in at 3580 on July 12. This is only 4 points off our 100% price target and 1 day off our 100% time target. We could say that Time and Price were balanced compared to the previous range. Perhaps this gives further insight into my desire to look for short trading opportunities in my Advanced ABC Trading article a couple of weeks back. In that case the market had other ideas for the next few days. The market action of the past few days now backs up a more bearish point of view. The bottom line is that this is a super example of how time can be treated the same as price, awesome!

Until next week......

Noel Campbell