According to the theory the prices of financial instruments move over the long and
short term in a square root relationship. As an example, on the October 26th, 2000
(marked by the purple square) the EUR USD reached an all time low of 0.82250.
On Jan 5th, 2001 it reached a major swing high of 0.95990. This is within a few
percentage points of the square of the sum of the square root of the low price + 2.
On Dec 30th, 2004 it reached a major high of 1.36680. This is within a few
percentage points of the square of the sum of the square root of the low price + 8 .
On July 13th, 2008 it reached a record high of 1.60380. This is within a few
percentage points of the square of the sum of the square root of the low price +
11.
All of the horizontal lines that were drawn on the chart are different degrees of
the square root of the price from Oct 26th, 2000. Look at how price respected
those levels again and again.
The magic of the Square of 9 (SQ9) does not end there…Do you see the vertical lines?
They are equally spread out 29 weeks apart (28.6792 rounded).
If you observe very closely, you will see that the major red trend line (the only one
that’s fat) begins at the 0.82250 price and goes through the point where it is one
unit of price increase and one unit of time (29 weeks).
The rest of the red trend lines are parallels.
Isn’t it amazing?
Do you see the green trend line?
It begins at the 0.82250 price and goes through the point where it is one unit of
price increase and one unit of time based on 29 days instead of 29 weeks.
In the words of W.D Gann: “When price and time square change is inevitable”.
Gann was a mathematician, a man of science. ‘Inevitable’ is a really obligating
word for such a person.