Squaring of Time and Price of the Global Financial Crisis GFC

Source: http://ozstock.blogspot.com

Here is some quick calculations I tried after reading about Gann's technique of squaring Time and Price. It is quite amazing to see how the numbers fall into place. For both the Dow Jones and the All Ordinaries Indices, the calculations are below:

Market Peak at: 8 Oct 2007
Market Bottom at: 2 Mar 2009
Time Difference = 73 weeks

All Ordinaries
High: 6760.1
Low: 3111.7
Difference = 3648.4
Difference divide by 52 = 70.16

Dow Jones
High: 14093.08
Low: 6626.94
Difference = 7466.14
Difference divide by 52, then divide by 2 = 71.8

The Time difference between high and low is 73 weeks. The Price difference for the All Ords is 70.16 (weeks) and Dow Jones is 71.8 (weeks). Both indices are so close to 73 weeks. For those new to Gann analysis, 52 is one of those magic numbers. In Gann's Master Calculator, he often use the square of 52. The number 52 comes from the fact that there are 52 weeks in a year and the data are based on weekly data.

Essentially, the Price is being rescaled by a logical factor which is 52, or a multiple of 52 as in the case of the Dow Jones. I am quite surprised that the numbers turn out so close.

The above analysis was possible because we looked at the past and identified the high and low point. For the future, we cannot really see the next high which started from the low of 2 March 2009. However, we can use the same scaling and perhaps suggest where the current rally may turn down.