There's a lot going on in this chart so let's take it step by step. This analysis is built on the markets' astounding degree of geometric unity. This analysis is also an analysis of future time and price levels. I believe this tyoe of analysis is the most valuable because it provides an opportunity to anticipate how the market may react to a particular event before the event has begun to occur. However, this is not a forecast. The market has no obligation to enter the zone which will be described. If it does, the analysis is applicable and actionable. As convention at Quantium Research, a complex analysis of a single chart will be described as a series of Analysis Points (APs) listed below.
1) The first point to consider is a simple Fibonacci division of the prior uptrend. Here we take the price range from the point labelled "X" to the point labelled "A" and divide into 38.2%, 50% and 61.8%, shown as the red horizontal levels. Since the high at A, the market has found support at both the 0.382 and 0.5 levels. The 0.382 was later penetrated, and support has recently been found at the 0.5 level. This is unlikely to be a significant reversal point, but more likely a minor retracement. The next level for the market to test is the 0.618 level.
2) The second AP uses the concept of angular symmetry. Observe the angle obtained by connecting the two highs at Y and A. A solid green line is shown connecting them and projecting further into the future. When the same line is copied and, importantly, with the angle intact and is projected from the low at X, the result is an ascending line which has not yet been tested a second time. Notice that it intersects the 0.618 level from AP1 inside the cyan circle.
3) AP3 uses a similar method as AP2. First, the angle of descent is obtained between two significant points, in this case, the highs at A and B. This is shown by the green dashed line. When this is copied and projected from the low at C, the resulting line projects forwards in time and, crucially, coincides in both price and time with the points where the line from AP2 intersects the 0.618 level from AP1 in the cyan circle. The case for support at this point is becoming very stong.
4) As the final AP in this analysis, consider the time elapsed between the low at X and the high at A. This is the prior uptrend which is being retraced currently. The uptrend terminated after 38 hourly bars. This, we know, is a derivation of the Fibonacci 0.382 ratio. Now when the time is measured between the high at A and the potential inflection point in the cyan circle, the result is 62 bars. Remarkably, the time axis also divides into the Golden Ratio to produce the point in the cyan circle. Consider what this AP means. 62 is, of course, a derivation of 0.618, or phi, as it was known to the Ancient Greeks. If the market were to reverse at that point in price and time, it would have retraced 61.8% of the prior uptrend's price in 161.8% of the prior uptrend's time! Further, of the whole move (from the low at X to the reversal from the cyan circle), roughly 38.2% of the duration was spent in the uptrend and 61.8% spend in the correction.
This is an exemplary case of proportional unity within a chart. It should be reiterated that this is not a forecast. The cyan circle needn't necessarily have magnetic properties. However, if the market does continue to retrace and falls into this area there is a very, very good arguement to suggest a reversal is highly likely. For the more inquisitive Technical Analysts reading, there is another AP from Gann Analysis excluded here which reinforces the first four. See if you can identify it! Hint: the squaring of price and time.
1) The first point to consider is a simple Fibonacci division of the prior uptrend. Here we take the price range from the point labelled "X" to the point labelled "A" and divide into 38.2%, 50% and 61.8%, shown as the red horizontal levels. Since the high at A, the market has found support at both the 0.382 and 0.5 levels. The 0.382 was later penetrated, and support has recently been found at the 0.5 level. This is unlikely to be a significant reversal point, but more likely a minor retracement. The next level for the market to test is the 0.618 level.
2) The second AP uses the concept of angular symmetry. Observe the angle obtained by connecting the two highs at Y and A. A solid green line is shown connecting them and projecting further into the future. When the same line is copied and, importantly, with the angle intact and is projected from the low at X, the result is an ascending line which has not yet been tested a second time. Notice that it intersects the 0.618 level from AP1 inside the cyan circle.
3) AP3 uses a similar method as AP2. First, the angle of descent is obtained between two significant points, in this case, the highs at A and B. This is shown by the green dashed line. When this is copied and projected from the low at C, the resulting line projects forwards in time and, crucially, coincides in both price and time with the points where the line from AP2 intersects the 0.618 level from AP1 in the cyan circle. The case for support at this point is becoming very stong.
4) As the final AP in this analysis, consider the time elapsed between the low at X and the high at A. This is the prior uptrend which is being retraced currently. The uptrend terminated after 38 hourly bars. This, we know, is a derivation of the Fibonacci 0.382 ratio. Now when the time is measured between the high at A and the potential inflection point in the cyan circle, the result is 62 bars. Remarkably, the time axis also divides into the Golden Ratio to produce the point in the cyan circle. Consider what this AP means. 62 is, of course, a derivation of 0.618, or phi, as it was known to the Ancient Greeks. If the market were to reverse at that point in price and time, it would have retraced 61.8% of the prior uptrend's price in 161.8% of the prior uptrend's time! Further, of the whole move (from the low at X to the reversal from the cyan circle), roughly 38.2% of the duration was spent in the uptrend and 61.8% spend in the correction.
This is an exemplary case of proportional unity within a chart. It should be reiterated that this is not a forecast. The cyan circle needn't necessarily have magnetic properties. However, if the market does continue to retrace and falls into this area there is a very, very good arguement to suggest a reversal is highly likely. For the more inquisitive Technical Analysts reading, there is another AP from Gann Analysis excluded here which reinforces the first four. See if you can identify it! Hint: the squaring of price and time.