The Hindu Business Line : Trader's Corner

Among the more exotic tools employed by Gann are the square of nine charts. It is no surprise that these chart looks similar to the astrological charts plotted in India since he is said to have picked up this technique while observing traders in India.

Gann is said to have used these square of nine charts extensively and had one square of nine chart for each security or commodity that he was trading in. Though the space available for this column is insufficient to do complete justice to this technique, we will deal with the construction of the chart this week and the usage of the chart in the next.

The basic chart is constructed by beginning at number 1 and writing the next number (2) to the left of 1 and then moving in a clock-wise spiral adjacent to 1 till the number 9 completes the first spiral. The next circle of the spiral is constructed by writing the next number (10) to the left of 9 and then moving in a clock-wise spiral around the preceding square. Thus the chart is expanded with the numbers spiralling out from the innermost spiral consisting of nine squares.

The purpose of this chart is to aid in judging the significance of a peak or trough. The chart is constructed for both time as well as price. A reversal point that occurs at a key juncture in both the price and time chart would be most likely to hold over the intermediate or even long term.

To move on to the construction of a square of nine chart for the security or commodity that one is interested in - the starting point would be a significant peak or trough. While working out resistances or upper targets, start with a trough and count upwards whereas for deriving support levels, start from a peak and count downwards. Similarly for time charts, the date on which the peak or trough occurred would be the starting point and then move forward or backward in time as required to form the spirals.

— Lokeshwarri S. K.

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