by Ken Gerber

One of the questions I often get about Lambert-Gann Educators’ Natural Squares Calculator is how to determine what angle to use for resistance and support in a particular market.

The answer to that question is always the same – one must study the current market to determine what angle is working for both price and time support and resistance. Working through three or four turning points should give us an indication of the current market rhythm.

The current Chicago July Wheat market is a classic example of a market that is following a very identifiable pattern both in time and price movement. The recognition of that pattern, and the anticipation of the next movement to come gives one a tremendous edge in finding great trade entry and exit points.

The chart shown is the July 2009 Wheat futures until expiration followed the next day by the July 2010 Wheat futures – thus the large gap between the close on July 14 at 516 and the open on July 15 at 595. This is how W D Gann kept his continuous commodity charts and the same methodology has proven to be correct in the current markets also.

The basic square root math of the Natural Squares is as follows

(Sq Rt High plus or minus .5) squared = 90 degrees movement

(Sq Rt High plus or minus 1) squared = 180 degrees movement

(Sq Rt High plus or minus 1.5) squared = 270 degrees movement

(Sq Rt High plus or minus 2) squared = 360 degrees movement

(Sq Rt High plus or minus 2.5) squared = 450 degrees movement

(Sq Rt High plus or minus 3) squared = 540 degrees movement

(Sq Rt High plus or minus 3.5) squared = 630 degrees movement

(Sq Rt High plus or minus 4) squared = 720 degrees movement

The high on the chart is on June 1, 2009 at the price of 677. The low on July 7, 2009 is 484. The market then moved back up to 627 on August 3.

The price relationship between those three prices is as follows.

Sq Rt 677 = 26.02 – 4 = 22.02 Sq = 485 or 720 degrees movement

Sq Rt 484 = 22 = 3 = 25 Sq = 625 or 540 degrees movement.

The time relationship between those three prices is as follows.

June 1 to July 7 = 36 degrees in time

June 1 to August 3 = 61 degrees in time

To analyze time forward from Aug 3, the dates to watch for a change in trend are in 30 degree increments from each other. Those dates would be as follows:

Sept 2 – 90 degrees

Oct 3 – 120 degrees

Nov 2 – 150 degrees

Dec 2 180 degrees

To analyze price forward from Aug 3, the prices to watch for a change in trend are in 90 degree increments from each other. The prices in 90 degree increments between the top of 677 and 484 are as follows:

Sq Rt 677 = 26.02 – .5 = 25.52 Sq = 651 = 90 degrees

Sq Rt 677 = 26.02 – 1 = 25.02 Sq = 626 = 180 degrees

Sq Rt 677 = 26.02 - 1.5 = 24.52 Sq = 601 = 270 degrees

Sq Rt 677 = 26.02 – 2 = 24.02 Sq = 577 = 360 degrees

Sq Rt 677 = 26.02 – 2.5 = 23.52 Sq = 553 = 450 degrees

Sq Rt 677 = 26.02 – 3 = 23.02 Sq = 530 = 540 degrees

Sq Rt 677 = 26.02 – 3.5 = 22.52 Sq = 507 = 630 degrees

Sq Rt 677 = 26.02 – 4 = 22.02 Sq = 485 = 720 degrees

You can see from the chart that around Sept 2 the market went into another leg down showing no recognition of the 90 degree date. However the 120 degree date of Oct 3 would have given an astute Natural Squares trader an excellent place to capture short profits on the leg down and be prepared to enter the market long. Not only did the market touch the 720 degree angle price of 485 on Friday October 2, it touched there again on Monday Oct 5 before a dramatic uptrend began.

It is obvious from my research into W D Gann’s original charts and writings that he used this methodology in conjunction with a forecast to determine which of the projected turning points in time would be the most likely for a change in trend. He would then use geometric angles to prove the trend change before trading the new trend.

*Ken Gerber **is a full-time trader **who* *researches and teaches **W D Gann**’s forecasting, trading**, ** and advanced Natural Squares Calculator lessons **for Lambert-Gann Publishing Co of Pomeroy**,** Washington**.* *Ken and Nikki Jones** also produce**d** the Natural Squares **Calculator, which** was patterned a**fter an original Gann square of nine.** (www.wdgann.com)*

Hi Ken

I met you when you were in Australia in November 1997.

I have been doing some work on the square and to me it seems that there has been two on going mistakes with the square none of them affect the results you get with it. They are in the construction there are ten digits with 0 or zero being a digit with out value, this is what should be in the middle then that will bring your even square root numbers in to the top right hand corner were they should be and move the odd square root numbers one off the bottom left corner, then you have zero in the middle with eight around the first square. The other is in the name of square of nine it has nothing to do with nine and more to do with eight.just small points but in maths they are importation

regards Darrell Webster

Comment by Darrell Webster — November 11, 2009 @ 1:51 pm

Haveing looked at your examples could maybe conclude that july wheat hitting 553 on Dec 08 a turning point? what kind of charts to use to get45 degrees and 90 degrees from top or bottom

Comment by Tim Trollope — December 14, 2009 @ 3:05 pm