William D. Gann’s Truth of the Stock Tape

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William Delbert Gann developed many technical analysis tools. His trading methods based on time and price analysis made it possible to determine not only when a trend change was imminent, but also what the best price would be to enter, or exit. In the presence of representatives of a publication, he made 286 trades in a period of 25 market days. Of these, 264 trades were profitable. His use of natural law and geometric proportions are as effective today as they were while he was alive.

Rule 1
If the high price of the entire week is achieved on Friday, expect higher prices next week.

Rule 2
If the low price of the entire week is achieved on Friday, expect much lower price next week.

Rule 3
In a highly uptrending market weekly low’s is achieved on Tuesday.

Rule 4
If market is in strong down trend (if main trend is down), the weekly highs are generally achieved on Wednesday.

Rule 5
When the price crosses the high of the last four weeks, it’s an advance indication of more higher prices.

Rule 6
When the price breached the low of the last four weeks, it’s an advance indication of more lower prices.

Rule 7
In an up trending market if the prices breaks the 30 DMA & remain below it at last for 2 consecutive days, it tells us of a much more great correction (vice-versa).

Rule 8
If the market rises for 5 consecutive days, there is a high probability that correction will last for 3 days. (Ratio is 5:3).

Rule 9
When the price starts rising from a particular level, ` 100 or 100% rise whichever is earlier becomes a strong resistance.

Rule 10
When price crosses the high of the last 3 days it tells us about much more higher prices on the 4th day. (Traders can buy it on the 4th day and place a SL order ` 3 below the last 3 days high) (vice-versa).

Rule 11
If subsequent correction is greater than the previous correction both in terms of price & time magnitude, this is an advance indication that trend is changing.

Rule 12
50% of the last highest selling Price is the strong support area. Any stock which is trading below this 50% level is not useful for investment.

Rule 13
If a price is rising for 9 consecutive day’s at a stretch, then there is highly probability for a correction for 5 consecutive days. (Ratio is 9:5)

Rule 14
Don’t ignore a double bottom & triple bottom signal on a monthly chart, after a minimum gap of 6 months. (advance indication for mid term investment)

Rule 15
Don’t ignore a double top & triple top signal on a monthly chart, after a minimum gap of 6 months. (Not the right place for investment / entry, price may fall).

Author bio: IE&M

Indian Economy & Market is an Indian media and information platform producing data-backed news and analysis on all the vital elements at the intersection of the economy, stock markets, mutual fund, insurance, commodities, currency, technology, startups and business.

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