|The Planetary Fan|
|The Planetary Fan|
|Written by Mariano LaRosa|
|Sunday, 01 November 2009 13:00|
W.D. Gann charmed many students and traders with his brilliant insights into the harmonic laws that bind natural phenomena to the financial markets fluctuations. As Known, the Gann Theory is based on two main pillars: Time and Price, linked together by a mathematical relationship, graphically expressed through the "Gann Angles”.
The Gann Angle is a series of straight lines of predetermined slant, with a growing rate of so many price units for each time unit. The time unit could be one day, one week or one month, depending on the time frame used in the chart.
What is most fascinating about the Theory is the time factor that is no longer exclusively linked to the calendar year cycle, but also to that of the other Planets rotating around the Sun.
You can enter any activity listed in the planetary context by Planetary Angles Task available in Market Analyst, by an algorithm processing the price into a planet, so that you can test the aspects of conjunction, squaring, opposition, etcetera, between the price and other planets.
We are talking about the following algorithm:
(Price / price factor / 360 - INT (Price / price factor / 360)) * 360 = longitudinal position in degrees
An example can explain the difference between the two angles as follows:
On a daily chart a Gann angle, with price factor equal to 1 per day, will have a rise of 360 points after 360 trading days, while a Jupiter’s Helio Planetary Angle will take about 12 years to rise 360 points, because this is the necessary time it will make a complete revolution circle around the Sun. From this example we can say that Gann Angles are nothing more than an estimation of Solar Angles.
Let’s have a look at an example of practical application of the Planetary Angles:
In Figure 1, the rising line is a heliocentric Mars Angle rising of 1/64 each degree longitude.
Between the 25th till the 28th of August, Generali Ass. had an average price of 17.70. Adopting a price factor of 1/64 and applying the algorithm of transforming a planet into a price, we get:
After watching the usefulness of the Planetary Angles in the previous example, we could imagine how useful it would be drawing these angles from a high or low price and with different price scales, as if they were the classic Gann Angles. It is at that point that the Planetary Fan Tool, introduced by the last upgrade of Market Analyst, comes to help, and it is nothing but an evolution of both Planetary Angles Task and Gann Angles Tools.
The great advantage of the Planetary Fan compared to Gann Angles is that their position, concerning the price, does not change in spite of the time frame used, because the time is related to the position in degrees of the planet employed, which does not change whether you are using a daily, weekly or monthly chart.
The following example is about a Planetary Fan application concerning the COMIT Index representing a Global Index of the Italian Stock Exchange.
In the monthly chart in Figure 2, we can see how the Planetary Fans 2x1, 1x1, 1x2 just seem classic Gann one degree of rotation around the Sun. Angles, but in fact they are built depending on the location expressed in heliocentric longitude degrees of the planet Jupiter. We used a price factor of 8 for the 1x1 angle, meaning that this angle has to increase 8 points per Jupiter’s degree, which takes about 11 days to move one degree of rotation around the Sun.
We placed these angles on the 1992 low, on the 2007 high and on the 2009 low: and what immediately shows is the sometimes extraordinary accuracy, with which the price reacts with these angles in a time frame of almost twenty years.
In Figure 3, we can see the same Chart but with a weekly time frame. As mentioned, the great advantage of using the Planetary Angles compared to Gann Angles is that the support and resistance levels are always in the same points regardless of the time frame used, as for each date, the planet position is univocal and unchangeable.
For this Index we used Planet Jupiter because the Italian Stock Market has proven to be in sound relationship with it, over time.
It is clear that any activity listed that you want to use needs a specific study to test the reliability of each planet in order to apply the one which fits better.