Applying Technical Analysis

GET

The Fear And Greed Cycle ”

It is extremely difficult to predict the fear and greed behavior of traders in advance. However, we can

overcome this difficulty in a roundabout fashion.

When a market makes a major low or bottom which results in a very large price swing, it is reasonable

to assume that the general public has expressed their emotions to an extreme. In other words, at a major

top, the greed of the traders has peaked and the subsequent market decline is due to the fear of the same

traders. Having defined this, we can go one step further and state the following: When a major top is in

place, the majority of trader emotions (greed, in this case) are synchronized for that moment in time.

Thus, Gann angles from such a major top, originate at the infancy of the next trader emotion cycle

phase; Gann angles from a major top can better define the larger emotion cycle than Gann angles from a

minor top.

In simple words: Gann angles originating from a major price swing are more useful in defining future

price swings than Gann angles originating from a minor price swing. The GET software provides

more importance to the major Gann angles.

Defining Price Swings ”

This leads us to the question of defining major price swings. It is easy to look at a price chart and say

“this is a high,” or, “this is a low.” Our task was to teach the computer the same.

By measuring the percentage price swing from each high and low, GET software defines price pivot

points as: P= primary, J = major, I = intermediate, and M = minor. (Illustration is shown above)

T-93

Applying Technical Analysis

GET

Gann angles originating from primary lows/highs have higher priority in defining the future path for the

trader™s emotional cycle. The next in line will be angles from major highs/lows, followed by the interme-

diate and minor pivots.

In general all Gann angles could provide support and resistance for price swings. However, the higher hi-

erarchy angles, such as angles from primary or major pivots, typically provide a more sustained and

stronger support/resistance.

T-94

Applying Technical Analysis

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USING GANN ANGLES WITH ELLIOTT WAVES

(for Waves 3 and 5)

When the market is moving up in a five wave

impulse, draw Gann angles going up from the

previous PRIMARY PIVOT HIGH. The angles 5

should provide resistance for the tops of wave three

and Wave Five.

3

P 4

1

2

2

4

1

P

3

When the market is moving down in a Five

3

Wave impulse, draw Gann angles going down

from the previous PRIMARY PIVOT LOW.

The angles should provide resistance for the

bottom of Wave Three and Wave Five.

T-95

Applying Technical Analysis

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USING GANN ANGLES WITH ELLIOTT WAVE

3

(for Wave Four)

When the market is moving up in a Five Wave impulse,

draw Gann angles going up from the previous PRIMARY

PIVOT LOW. The angles should provide SUPPORT

for the BOTTOM of Wave FOUR.

4

1

2

P

P 2

4

1

When the market is moving down in a Five Wave

impulse, draw Gann angles going down from the

previous PRIMARY PIVOT HIGH. The angles should

3

provide RESISTANCE for the TOP of Wave FOUR.

T-96

Applying Technical Analysis

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OPTIMIZED GANN ANGLES

Optimal Gann Angles For

TRW (Stock)

In the past versions, we provided a pre-built scale for Gann Angles for selected U.S. com-

modities. This created two major drawbacks:

1) The built in scales could not be altered to allow for day to day volatility of the

markets.

2) Gann angle scales were only available for selected markets.

We have now added our routines which allows the user to find the optimal angle for any

market loaded on the screen including Stocks, Spreads, Cross Rates and Foreign Issues.

The routines also include volatility adjustments.

The optimized scale is printed on the chart and can be saved for future reference.

T-97

Applying Technical Analysis

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GANN BOX ANALYSIS

One of the drawbacks in most programs is the lack of adequate timing studies. We have at-

tempted to meet this need with studies such as the Time Clusters and the GANN BOX

ANALYSIS. The word Gann scares a lot of traders simply due to its complexity and no

clear direction on how to use it. In the past two years, we have researched this field quite

extensively and have found precise ways to use the Gann Box. The software allows you to

draw Gann Boxes in various configurations. So users that follow the traditional Gann

methods can still use it as presented in most of the published materials. However, we have

used the results of our research and added the PRE-FIXED GANN BOX.

The major criteria we found in our research was the Ratio of the box Rise/Run should be 1

or multiples of 1 such as 10, 20 etc.; Gann Boxes are drawn from Major Pivot Lows or

Highs. The amount of price from the pivot is the RISE and the number of bars from the

pivot is the RUN. The box shown below uses 450 bars (RUN) and 450 price from the pivot

low which is the (RISE). The ratio of RISE / RUN = 450/450 =1.

RATIO = RISE/RUN = 450/450 = 1

RATIO = RISE/RUN = 360/360 = 1

©

PRICE

©

©

RUN = # BARS RUN = # BARS

The preferred ratios (in order of importance) are as follows : 1, 2, 5,

10, 20, 40 and (2.5 as a last resort).

T-98

GET Applying Technical Analysis

Our research on all markets and on all time frames show that if you used the

following ratios (in order of importance) 1, 2, 5, 10, 20, 40 and 2.5 (as a last

resort) and draw Gann Boxes from Major Pivot Lows or Highs, the angles gen-

erated provide Support and Resistance levels as the market progresses into the

future. In addition to the ratio, this technique also requires you use a Fixed

Time interval of 45, 90, 180, 360 etc.; The following boxes show some of the

other ratios that can be used.

GANN BOXES drawn with various ratios.

RATIO = RISE/RUN =

1800/360 = 5 RATIO = RISE/RUN =

900/360 = 2.5 (LAST RESORT)

RATIO =

RATIO = RISE/RUN

RISE/

= 900/180 = 5

RUN

=3600/

360 = 10

RATIO = RISE/RUN

= 1800/180 = 10

Since the Box is drawn in advance, it provides a pathway or a road

map for the market. The combination of the Fixed Time Intervals

and the Pre-Fixed ratios provide amazing end results.

T-99

Applying Technical Analysis

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As explained on the previous page, we use pre-fixed time (bars) length of 90, 180, 225,360, 450

etc. along with pre-fixed prices to provide the BOX RATIO of 1,2,5,10,20,40 and 2.5 . By using

the PRE-FIXED Ratios, the underlying Math stays the same regardless of the Box Size. In the ex-

amples below we use various boxes as the market progresses.

Here we start out Now we switch to a

with a 90 by 1800 90 by 3600 Box

Box with a ratio of with a ratio of 40.

20.

«

«

This Box provides sup-

port for the prices

marked by the Arrow. This new Box continues

to provide the same sup-

port but with a different

angle.

New Box

New Box

180 by 3600

180 by 1800

Ratio = 20

Ratio = 10

í í

«

«

Again the same prices

are supported by yet an

other angle. Also no-

«

tice the new price resis-

tance marked by the

new arrow.

T-100

GET Applying Technical Analysis

As the price range expands, the user simply draws a larger Box that confirms to the Pre-

Fixed Ratios. The underlying math automatically adjusts itself by shifting angles

around but still providing the same Support and Resistance as the market

progresses.

í

« í

New Box

225 by 2250

Ratio = 10

ARROWS INDICATE THE SAME PRICE REVERSALS PROJECTED BY

DIFFERENT ANGLES FROM BOXES WITH VARIOUS RATIOS.

Long 95 Mar

Short 95 July

WHEAT SPREAD

T-101

Applying Technical Analysis

GET

March 95

Bean Oil

New Box 360 by 3600

Ratio = 10

í

« í

ARROWS INDICATE THE SAME

«

PRICE REVERSALS PROJECTED

BY DIFFERENT ANGLES FROM

BOXES WITH VARIOUS RATIOS.

Gann Boxes drawn with these ratios work on all Commodities, Stocks and Spreads

using Weekly, Daily and 60 minute charts. The Gann Box also works well with Elliott

Wave Analysis.

T-102

GET Applying Technical Analysis

APPLE

Computer

March 95 Yen

- 60 min

T-103

Applying Technical Analysis

GET

USING PRE-FIXED GANN BOX WITH ELLIOTT WAVES.

The PRE-FIXED Gann Box can be used along with Elliott Wave analysis. There is not

much to explain on how to use this combination. Remember the public service announce-

ment that says "Here is your Brain, here is your Brain on drugs, Any questions?". Like-

wise, here are two charts with Elliott Wave analysis and the Pre-Fixed Gann Box.

ANY QUESTIONS?

FEB 95

Live Cattle

MAR 95

SUGAR

T-104

Applying Technical Analysis

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REGRESSION TREND CHANNELS

This is a simple but very effective study. The idea is to draw an upper and lower channel by using a Stan-

dard Deviation of the prices. It is similar to the Bollinger Bands which draw bands using standard devia-

tions of a moving average. However, instead of using a moving average, we are simply using the Linear

Regression line of a swing identified by you.

Upper

Channel

®

«

Lower

© Channel

«

Linear Regression

Channels drawn by

Line using the Mid-

using a 2.5 Standard

points of data.

Deviation of the

Midpoints and the

Regression Line.

The chart on the left shows two market swings from low to high. The line drawn through the middle is a

standard Linear Regression line using the midpoints of the swing. The chart on the right shows the upper

and lower channel drawn using 2.5 standard deviation of the Regression Line and the Midpoints. The Re-

gression Channel menu allows the user to calculate the Trend or Regression line by using the midpoint,

high, low etc; It also allows the user to set the amount of Standard Deviation for the Upper and Lower

channels.

In addition, a Pearson's r is included that shows how well the Linear Regression fits the data.

T-105

Applying Technical Analysis

GET

USING THE REGRESSION TREND CHANNELS

When the Market is trending or just trading with a bias in one direction, the Regression Trend

Channels can be used to define the upper and lower boundaries of the market. As long as the mo-

mentum stays in the same direction, the market tends to stay within the channels. As soon as the

market changes bias, the prices break the channel signalling the end of the move.

The primary functions of the Regression Trend Channels are A) catching the end of a Wave Two

to trade the Wave Three phase B) Protecting profits inside a Wave Three C) Entering at the end

of a Wave Four for the Fifth Wave sequence D)Protecting profits in a Fifth Wave and entering a

trade in the opposite direction at the end of a Fifth Wave. The following examples will make this

very clear.

Take profits at the

Buy at the end of

end of Wave 3

Wave 2

¬

«

Buy at the end of Sell at the end of

Wave 4 Wave 5

í

«

Take profits at the

end of Wave 5

T-106

Applying Technical Analysis

GET

T.J.™s Web Levels

The T.J.™s Web Levels are special price arrangements based on Fibonacci relationships from the

previous weeks market action of that stock. Three areas are calculated for the following day:

neutral zone, resistance area, and support area.

NEUTRAL ZONE: This zone is usually narrow and is a few points above and below the

previous weeks close. When the prices trade above the neutral zone,

the stock is considered to be strong, and vice-versa.

RESISTANCE AREA: Above the neutral zone, there are four resistance levels called RA,

RB, RC, and RD. These are Fibonacci resistance levels based on the

previous weeks stock actions.

SUPPORT AREA: Below the neutral zone, there are four support levels called SA, SB,

SC, and SD. These are Fibonacci support levels based on the previ-

ous weeks stock actions.

R R

RD

E E

S S

I I

RC

S S

T T

RB

A A

N N

C C

RA

E E

NZUP

PREVIOUS

NEUTRAL ZONE NEUTRAL ZONE

NZDN

DAYS CLOSE

SA

S S

U U

SB

P P

P P

SC

O O

R R

T T

SD

T-107

Applying Technical Analysis

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On the next page is an illustration of how to use T.J. Web Levels. T.J.'s Web Levels are

shown for McDonald's stock based on Friday's close.

The Web Levels suggest support and resistance levels for the next trading day. If the

stock price rallies on Monday, the last resistance level (RD) suggests this stock should

not trade past the $34 level. Equally, the last support level (SD) suggests that this stock

should not trade past the $30 level. On Monday, McDonald's stock traded to a high of 31

3/8 and to a low of 30, containing stock price movement to within this day's SA and SD

Web Levels.

This example has been given to illustrate the principle behind T.J.'s Webs. You cannot

expect these Web Levels to hold true all the time, but if used on a continual basis they

willFRIDAY'S CLOSE good support and resistance.

(1) consistently provide (2) TRADING ACTION FOR MONDAY

T.J.'s Web resistance levels

based on Friday's close

neutral

levels

high

This is where

this stock

actually

The T.J.'s Web Levels

based on Mondays traded to

close are shown on Monday

on the next page. low

T.J.'s Web support and resistance

held at the high and the low end range

T.J.'s Web support levels

for the day.

for Monday

T-108

Applying Technical Analysis

GET

The T.J.™s Web Levels can be used with intraday indicators such as the slow 21 bar sto-

chastics and the Elliott Oscillator on a five minute bar chart. When the Elliott oscillator

gives a true Elliott divergence, as described in the earlier in this section, and the stochas-

tics is above the 80 level, a short signal can be initiated at a T.J.™s Web Level using the

next Web Level as the stop. A buy signal works exactly the opposite.

(4) TRADING ACTION FOR TUESDAY

(3) MONDAY'S CLOSE

T.J.'s Web resistance levels based

on Monday's close

high

neutral

levels

This is where the stock

traded to on Tuesday

low

T.J.'s Web neutral levels

held at the high and low

T.J.'s Web support levels

end range for the day.

for Tuesday

T-109

Applying Technical Analysis

GET

Extended Fibonacci Time Ratios

1.62 X 2.62 X

Initial Initial

Time Between

Time Time

Two Swing Points

P or J

P or J

Extended Fibonacci Time Segments

Between Two Major Highs

Extended Fibonacci Time Segments

Between Two Major Lows

P or J

1.62 X 2.62 X

P or J

Initial Initial

Time Between

Time Time

Two Swing Points

T-110

Applying Technical Analysis

GET

Extended Fibonacci Time Ratios

1.62 X 2.62 X

Initial

Time Between Initial

Time

Two Swing Points Time

Fibonacci Time Segments

P or J

Between A Major High & Major Low

P or J

The general idea is to take the initial time between two Primary or Major Pivots. These

pivots can be identified by the user or from the labels generated by the software from the

Pivots Menu.

This initial time is extended to the future using various Fibonacci ratios. We suggest 1.62

and 2.62. However, you can use any combination. If you do not like the preset ratios we

have added, you can enter your own values such as 3.79 , 2.94, etc.

The theory is to look for a potential change in trend at these future extended time periods.

T-111

GET Applying Technical Analysis

FIBONACCI TIME CLUSTERS

Take the time distance (number of bars) between two pivots and extend (project) ratios

of this time distance to the future. You will notice that many of the future pivots (change

in trend points) occur at these extended time periods.

QUESTION:

What ratios should I use? Do I use all the pivots or just the Primary and Major ones? Do

I use High to High swings or Low to Low swings?

ANSWER:

A very large number of traders use this method. However, each trader uses different ratios,

different sets of pivots, and different types of swings. You can basically use any

combination and still obtain accurate projections some of the time. From our research, we

have not found any one combination that works best all the time.

Extended

Extended

Ratios

Ratios

Time Distance

Between Two Pivots

Potential time

periods for change

in trends

Extended

Extended

Time Distance

Ratios

Ratios

Between Two Pivots

T-112

GET Applying Technical Analysis

QUESTION:

Then how does one use this technique?

ANSWER:

Use all reasonable combinations, and look for a group of Clusters. Lets assume numerous

traders are using this study, each using different ratios, pivots, etc. Regardless of which

combination is used, the collective projections of all traders will result in certain areas

where a majority of the traders will get a CHANGE IN TREND PROJECTION.

Thus the areas identified by a group of Clusters define such collective projection levels.

Future Projection Using

Various Methods

Time Distance

Between Two Pivots

Method A

Method B

Method C

Method D

Method E

Method F

Time Distance

Between Two Pivots

Collective Results

Areas where a majority of methods

collectively project a future

change

in trend.

T-113

GET Applying Technical Analysis

Example - Fibonacci Time Clusters

The chart shown below is the Daily December 1989 D-Mark. The Time Clusters were

generated by using the following:

# All Primary and Major Pivots.

# Fibonacci Time extensions of 1.62 and 2.62 with 100 % weighting.

# High to High Swings plus Low to Low swings

# Minimum 10 bars in between pivots

# Maximum 100 bars in between pivots.

For more details on the above, please see next page.

Circles show Change in Trends

that were projected by the

December 1989

Fibonacci Time Clusters.

D-Mark

Projection For:

Future

Future

C.I.T

C.I.T

2/08/90

1/11/90

Fibonacci Time Clusters.

T-114

GET Applying Technical Analysis

FIBONACCI EXTENSION PRICE CLUSTERS

Fibonacci extensions and retracement levels are used by just about every trader. Sure they

may all have their own unique methods of applying them, or their own secret Fibonacci

ratios.

Regardless of the numerous methods used, the collective projections of all traders will

result in certain price levels where a majority of the traders will get the same support or

resistance projections. The software can identify such collective levels by way of

Clustering.

2.62 x Z

Fibonacci

1.62 x Z

2.62 x Y Extension

Cluster

1.0 x Z

1.62 x Y

1.0 x Y

Z

Y

T-115

GET Applying Technical Analysis

Example - Fibonacci Extension Price Clusters

The chart shown below is the Daily March 1992 Swiss Franc. The Fibonacci Price

Extensions were generated by using the following:

$All Primary and Major Pivots.

$Fibonacci Price extensions of 1.62 , 2.62 and 4.25 with 100% weighting

using Rallies.

Using 1.62, 2.62, & 4.25

March 92

Fibonacci Ratios

Swiss Franc

as of 11/04/91 Major Resistance

Level at 7360

Cluster of Fibonacci

Price Extension Identified

By GET.

Projection made on 11/07/91

when price was at 68.17

Projection: March 92 Actual High 73.93 on 1/7/92

2 Months Later

Swiss Franc

as of 11/04/91

The initial cluster of 7360 was

projected by the software as early as

November 7th, 1991.

Result:

Two months later, the March Swiss Initial Projection made

from here to 73.60

topped out at 73.93.

T-116

GET Applying Technical Analysis

FIBONACCI RETRACEMENT PRICE CLUSTERS

Just like the extensions, traders all around the world use Fibonacci Price Retracement

levels to determine support and resistance levels. Different traders use different retrace-

ment levels and also calculate from different swing levels.

Regardless of the numerous methods used, the collective projections of all traders will

result in certain price levels where a majority of the traders will get the same support or

resistance projections. The software can identify such collective levels by way of

Clustering.

38 %

50 %

62 %

38 %

38 %

50 %

50 %

62 %

62 %

FIB RETRACEMENT

CLUSTER

T-117

GET Applying Technical Analysis

Example - Fibonacci Retracement Price Clusters

The chart shown below is the Daily June 1992 Crude Oil. The Fibonacci Price

Retracements were generated by using the following:

$All Primary and Major Pivots. Fibonacci Price retracements of 38%, 50%, 62%

and 75% with 100% weighting using Declines.

June 92 Crude Oil Using 38%, 50%, 62%, & 75%

Fibonacci Retracements

on 1/22/92

20.10 to 20.40 level

Major Retracement Cluster

Identified by GET

Projection: June 92 Crude Oil

on 2/25/92

Actual High

The initial cluster of 2010 to 2040 was

at 20.00

projected by the software.

Result:

The actual high in the June 92 Crude Oil

was at 2000.

T-118

GET Applying Technical Analysis

Retracements, Extensions, and Elliott Extension Buttons:

Three different types of Price Clusters can be calculated. They are graphically dis-

played below:

Retracements Extensions Elliott Extensions

Z + 262%

262% of

Z added to

Retrace-

Swing ment Low

High

Z + 162%

162% of

Z added to

Z + 100 % Retrace-

ment Low

Swing

Swing

High

High

Z

Z

Retracement

Low

Swing Swing

Swing

Low Low

Low

Retracement of Fibonacci Extension Fibonacci Extensions

Swing Range added on to the end added to the end of

of the Swing a Retracement. These are

normal Elliott Wave type

extensions as used in

Waves 1,2,3, etc.

T-119

GET Applying Technical Analysis

ANDREWS MEDIAN LINES

Dr. Alan Andrews developed a technique called Median Lines. His method by itself is

used as a complete trading tool by many traders. Over the next few pages we will discuss

the application of Median Lines in conjunction with Elliott Wave Analysis.

To draw a Median Line, you need three points. Once three market points are identified,

you are ready to proceed with Median Lines. The first point is called the Base.

‚

BASE

Connect a straight line between points 2 and 3. Find the midpoint of this line.

‚

MIDPOINT

í

BASE

Draw a line connecting the Base Point with the Midpoint. This line is called the Middle

‚

Line.

«

MIDDLE LINE

BASE

T-120

GET Applying Technical Analysis

Draw lines from point 2 and point 3 that are parallel to the middle line. These lines are

called the Upper and Lower Parallel Lines.

UPPER PARALLEL

LINE

‚

MIDDLE LINE

LOWER PARALLEL

LINE

BASE

The downside Median Line is exactly the opposite of the upside Median Line. Once again

three points are found. The first point is the Base Point. Find the Midpoint on a line

between points 2 and 3. Connect the base (point one) through the Midpoint. This line is

the Middle Line. Then draw lines from points 2 and 3, parallel to the Middle Line. Again,

these are referred to as the Upper and Lower Parallel lines.

UPPER PARALLEL

LINE

BASE

MIDDLE LINE

‚ LOWER PARALLEL

LINE

T-121

GET Applying Technical Analysis

Per Dr. Andrews rules, the prices will do one of two things as it approaches the Middle

Line:

1) The price will reverse at the Middle Line

OR

2) The price will trade through the Middle Line and head for the Upper Parallel

Line and then reverse. Some examples of both situations follow:

REVERSE FROM MIDDLE LINE

BASE

‚

§

REVERSE FROM MIDDLE LINE

BASE

‚

§Reverse

T-122

GET Applying Technical Analysis

§R e v e r s e

GAP THROUGH MIDDLE LINE

‚

BASE

Extended Parallel Lines

In some instances, the standard parallel lines have to be extended. This is necessary to

accommodate fast moving markets. Again, the standard median line is drawn. The Up-

per and Lower parallel channels are drawn. You are then ready to extend the normal

parallel lines. Find the distance from the Middle Line to the Upper Parallel Line. Us-

ing this same distance, draw a new Parallel Line above the Upper Parallel Line. The

same procedure is used for the Bottom Parallel Line. If you are using the Pitchfork

tool from the Global Toolbox, this can be done by simply turning on the ratios over

100. This will automatically measure the distance from the Upper and Lower Parallel

lines (which is the 100% ratio) and draw the Extended Parallel Lines off of both the

Upper and Lower Parallel lines.

T-123

GET Applying Technical Analysis

UPPER PARALLEL

LINE

MIDDLE LINE

LOWER PARALLEL

LINE

Extended Parallel Lines

UPPER EXTENDED

PARALLEL LINE

ô

UPPER PARALLEL

SAME

LINE

MIDDLE LINE

ô

SAME

ô

LOWER PARALLEL

LINE

SAME

LOWEREXTENDED

PARALLEL LINE

ô

SAME

T-124

GET Applying Technical Analysis

It may be necessary to draw extended Parallel Lines to catch the top of Wave 3. This

is usually the case when the market really gaps through on a very powerful Wave 3.

UPPER EXTENDED

PARALLEL LINE

UPPER PARALLEL

Wave LINE

Wave

Wave

Wave

Wave