The Hindu Business Line : Trader's Corner

We dealt with the construction of W. D. Gann’s square of nine chart in the previous week’s column. To recapitulate, the chart is constructed by beginning at the most recent and significant trough or peak and moving around the first number in spirals. The first spiral along with the starting number occupies nine squares and hence the name.

Once the price chart has been constructed, the chart should be split in to four squares by drawing two lines, one vertical and one horizontal passing through the centre of the chart. These lines are called the cardinal crosses. Next, two diagonal lines ought to drawn, again passing through the centre. These lines are called the ordinal crosses.

An inspection of this chart shows that numbers that are squares of even numbers, such as 16, 64, 100 and so on occur in the top right hand corner of the chart. Numbers that are squares of odd numbers such as 9, 49, 81 and so on occur at the bottom left hand corner of the chart. Similarly the numbers that are present at the bottom right hand corner of the chart are the mid-point between the squares of the odd and even numbers.

The simplest interpretation of these charts is to note if a significant trough or peak that was formed recently is on or close to the cardinal or the ordinal crosses. If it does, then there is a greater chance that the trough or peak is likely to be a significant one and remain unchallenged for a greater duration. It would be best to verify if the date of an important reversal point too falls on a cardinal or an ordinal cross with a square of nine chart constructed with dates.

This is the simplest interpretation of the square of nines chart. The more complex way of interpretation is to shift the square of the circle so that the important peak or trough lies to the right of the zero degree angle (on cardinal cross). Making the cardinal and ordinal crosses in to a movable ring would thus convert the subsequent numbers that fall of these lines into supports and resistance levels.

— Lokeshwarri S.K.

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