Aaron Lynch
Aaron Lynch		 Establishing price support and resistance gives confidence for all styles of trading. Advocates of ABC trading, Elliott Waves or any other style, will enjoy greater success in their trades when support and resistance can be easily identified. Using Gann based analysis you can identify through a variety of different tools areas to watch.

WMR (WMC Resources) listed on the ASX has had a recent sideways pattern, after a period of lower tops and lower bottoms. Using the Gann retracement tool over the major bull range July/Jan in orange we see the price action found support as it crossed the 50% milestone circle 1. Then measuring the bear range in blue from Jan/May this year with the same tool we see the price action found resistance just past the 50% highlighted by circle 2.


WMR Daily Chart

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These are two areas that we should watch for support and resistance as the price action moves forward. This alone is good background information; however, we need to get more specific if this is to be of assistance in the current set up.

The weekly chart of WMR below allows us a bigger perspective and this is the best way to analyse areas of significance. Using the ABC pressure points tool allows us to measure the first range out of the July top. Gann discussed in many of his texts that the first range out of a top or bottom is very important for price projection. The orange circle highlights the 100% milestone at $4.80 this represents where the range has exactly repeated. We can see on the weekly chart that the action has actually double bottomed on this price.


WMR Weekly Chart

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Extending from this concept we can also measure using the manual ABC tool the full extent of the bearish range from the July top to the first weekly low in August. The chart below measures that range and extends out to 50% to signal a target of $4.82. This links in with our double bottom pricing and the repeating ranges that were signalled at $4.80.


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Finally using a basic technical pattern reading approach displays a contracting upside movement, combined with a base of support around the $4.80 area. I think of this like a spring being compressed, eventually it will have to “spring back” generally we would expect in the case of WMR an upside break out. This view is supported in the chart below looking at some geometric angles from the major turning points.

We can see a classic flag pattern forming; it is interesting to note that these are not normal trendlines linking points on the chart. They are areas where price and time are in balance, WMR has certainly responded to these areas.


WMR Daily Chart

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Combining all these points together, we could look for strong support around the $4.80 price point and a potential break out on the upside. A good sign on the swing chart will be expanding upside ranges and contracting or consistent downside ranges.

Good Trading

Aaron Lynch