How to profit from applied

How to Profit From Applied
Gann & Fibonacci
The Definitive Guide to Market Geometry Space & Time
By Gene Nowell


Copyright © 2013 Gene Nowell
All rights reserved.
ISBN-10: 148398267X
ISBN-13: 978-1483982670


CONTENTS
Introduction

1

1

The Mysteries of Price & Time

3

2

Geometric Angles & Charts

9

3

Types of Charts

12

4

Constructing Fibonacci Fan Lines

21

5

Trading System or Trading Method

26

6

Gann Grid

36

7

360 Price Analysis

53

8

Square of 9

62

9

Harmonics in Numbers

66

10

Number Seven

77

11

Money Management

85



DEDICATION
This book is dedicated to the wonderful person who has been an inspiration in my life. One who's
humor, good nature, wisdom; encouragement and love have always been there before I've had the
need, my Mother. God rest her soul.

INTRODUCTION
Many of the studies in this book are focused on the application of angles and how they relate
to previous market swing highs and lows and future points of price and time resistance. Some of
these angles are from Gann's work, others are Fibonacci Fan Lines and some are my own
techniques. Regardless of which ones they are, you will come to understand the significance of them
and how you can use them in your every day trading. It makes no difference which time frame they
are applied to, the principle and results are close to being the same. Some chart illustrations are from
the Forex markets and others cover some of the traditionally traded markets like the S&P and
Metals.
When I was introduced to W.D. Gann, I studied everything I could get my hands on. Gann
Courses, Books, Seminars, Radio Programs, Tools, Computer Programs etc; the more I studied, the
more I realized the depth of Gann's work. However, most of it did not have the accuracy I was
looking for. But there are a few techniques I have found to be quite accurate. I guess I am not smart
enough to understand all of Gann's theories. It is my firm belief that W.D. Gann, at times, tapped
into the depths of knowledge of the 4 universe that is unknown. Something like Edgar Cayce did
when he went into his trances. Gann published a book called the MAGIC WORD. In this
publication, he spoke of the importance of meditating and verbal communication so one could be in
tune with the Harmonic Vibrations which he believed are the foundation of the universe. Unless a
person pursues this avenue of the unknown they will most likely not comprehend all of Mr. Gann's
Work.
I am not one who has taken his work to that level but, I have taken the angle techniques he
used and dissected them front to back, back to front, inside out and more and then discovered some
other techniques that have a real significance in technical analysis. One of the most important pieces
of knowledge I have acquired over the years is this: Support resistance is not always on the
horizontal plane. It keeps changing based on where market price is in relationship to time.
There is a dimension not seen on charts unless geometric angles are applied and I intend to make
that dimension and the symmetry of markets very clear to you in this book. This is what I am all
about and this is what the book is all about; ANGLES and making money.
When I talked to a publisher in the Carolina's about writing this book, it was suggested that I

include significant days of the week and month to watch for reports that may affect price movement
in the Forex and other markets. Although this is very significant and should not be neglected, I have
decided to exclude that information and in its place, discuss Money Management.
This is a subject that has been talked about but seldom looked into thoroughly. Dr. Barry
Burns is one of the few who has a section in his online courses which addresses the issue. He covers
the major commodity markets like Grains, Financials and Metals. W.D. Gann gave important
information about protecting your account equity and trading a certain number of contracts for the
money in your account, but he did not expound on the types of contracts outside of the grains
which can be traded. I will go in depth regarding contract size and money needed to trade and cover
stop numbers and placement.

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Gene Nowell

Proper money management will be covered more thoroughly than most other publications. I
believe this to be the KEY to successful trading. It must be used in every trade you make. I hold no
responsibility for loss due to any adverse market conditions or any other reason. Simply put, one
must take responsibility for their actions and not blame losses on conditions or
"THEM/THEY/THOSE GUYS" and others.
Next, I cover Gann and the fundamentals and then I get in depth on some of Gann's
techniques. I cover today's news and how it affects the future. Included in this study I examine
Gann's statement about how the fundamentals "CAST THEIR SHADOWS ON THE CHARTS"
in advance of the news. You will see these shadows and how they fall on the charts. It is my
intension to show you why Geometric Angles should be used when analyzing any market.
Furthermore, it is especially beneficial to apply angles to Forex charts over other markets. The
uninterrupted intra day data from Sunday night through Friday evening develops a foreground from
which these geometric angles can be used as a roadmap to knowledge of market strength and
weakness and ultimately profits. I will show angle analysis like never before. You will see an in depth

study using Fibonacci Fan Lines and you will learn how to develop a successful trading plan using
Fibonacci Fan Lines and Gann Angles along with my own proven methods and procedures. Some
of 7 the material I reveal in this book has never been presented to the public before.

2


1- THE MYSTERIES OF PRICE & TIME
Who is wise enough to tap into the depths of knowledge that our loving God employed when
he created the universe? A perfect harmony of mathematics and beauty were put into motion to
create the wonders of the Galaxies. This knowledge is far too great for any one man or any people
to grasp. To say that a BANG started creation is folly. This is the same thing as saying one could
take billions of letters and set a bomb off in the middle of them and expect to get a perfect library
out of it all. That is harder to believe than to believe in a Creator who put all what we see in perfect
balance. I am not trying to make a religious sermon out of this, but I am trying to put things in
Perspective. A BANG does not create, it destroys. My point being, markets are part of the universe
and a part of this creation. And market movement is a reflection of the forces in motion which all
have a time and place to culminate. An in depth study of these relationships would take generations.
Mr. W.D. Gann just scratched the surface of this knowledge when he began using angles on charts
to recognize certain price patterns. Furthermore, he used the stars and planets as the foundation of
his work. At the end of his life I am sure he said I regret now that I am coming to the conclusion of
my life and that I am only now beginning to understand price & time and their relationship to the
stars. There is a beginning and an end to everything. Let us take a step in the direction of wisdom to
try and comprehend these relationships of mathematics and geometry so a beginning and end of
trends can be identified. Sit back, relax and let's take a journey through the wonderful world of
MARKET GEOMETRY SPACE & TIME.
As the markets evolve on a minute by minute display of Geometric relationships, there is clear
evidence of previous highs and lows relating to future points of support/resistance and timing. It
must be understood that each new swing that is formed has a relationship of previous swings
regardless of how insignificant they may appear. To make this point more easily understood, let us

consider the following example; Picture a pond in your mind's eye! Now throw a stone into the
pond and notice the ripple effect this stone has created on the water's surface. Each wave that
moves out from the center is energy and this energy has an effect somewhere in time. These energy
waves are the forces that create market high and low at swing points. If you throw a larger stone
into the pond, a much greater set of waves will go out from the impact point. Thus significant
waves create longer lasting effects in the future and can also go higher from the surface than the
effect of a smaller stone. This would be the amplitude effect of price on the wave.
With that said, we now look for support resistance in the future. This price support/resistance
is not always on the horizontal plane. It is however, always on an angular plane. These planes are in
direct relationship to previous referenced swings. This is how the geometric angles come into play.
They relate to the waves of the past to show the geometry of support/resistance in the future.
The charts displayed in this book have geometric angles which originate from these previous
swings (waves) and project out into the future for use as support/resistance and timing. The
TIMING POINTS are derived from the termination of an angle at strategic locations on the chart.
One of the key factors of this analysis is to know which angle will offer significant
support/resistance.

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Gene Nowell

Another significant use of these angles is to use them as an indication of market strength and
weakness. When price moves up and down on the charts, we will be able to know the strength of
the current trend and can have an 11 indication if the next new high in the trend will be the last
before price moves in the opposite direction. These and many more trading strategies will be found
in this book, MARKET GEOMETRY SPACE & TIME. Please explore my website:
www.gannline.com and check out the dates projected and the videos that explain the products I use
to obtain these targets.
FOUNDATIONS & WORDS FROM W.D. GANN

Speculation or investment is the best business in the world if you make a business of it. But in
order to make a success of it, you must study, be prepared, not guess, not follow inside information
or depend on hope or fear. If you do, you will fail. Your success depends on knowing the right kind
of rules and following them. Gann said, "Keep this well in mind, For Stocks or Commodities to
show up trend and continue to advance, they must make higher bottoms and higher tops. When the
trend is down, they must make lower tops and lower bottoms and continue on down to lower levels.
But remember, prices can move in a narrow trading range for weeks, Months or even years, and not
make a new high or a new low. But, after a long period of time when Stocks and Commodities
break into new lows, they indicate much lower prices. And after a long period of time when they
advance above old highs or old tops, they are in a stronger position and indicate higher prices. This
is the reason why you must have a chart which goes a long way back, in order to see just what
position a Stock or Commodity is in, and at what stage it is between extreme high and extreme low.
You will go broke trading on hope and fear. You will never succeed buying or selling when you
hope the market is going up or down. You will never succeed by making a trade because you fear
the market is going up or down. Hope will ruin you, because it is nothing more than wishful
thinking and provides no basis for action. Fear will often save you if you act quickly when you see
that you are wrong. The fear of the market is the beginning of wisdom. Knowledge which can only
be obtained by in depth study will help you to make a success. The more you study past records, the
surer you are to be able to detect the trend of the future".
There are a number of rules Gann used in his analysis with angles. Above all his rules was the
use of correct charts. There are two types of charts that can be used for analysis. They are the
Market Day chart which shows trading days. Then there are the Calendar day charts which
encompass the entire calendar year and show all 365 days. Any type of chart with the posted
High, Low and close will be fine because time and price is a measuring instrument and as long as
they are uniform, an angular structure can be applied.
When working with a market daily chart, the important thing is to set up all the data with no
spaces for non-trading days like weekends or holidays. If you have the capability to set up a calendar
day chart, you will find important timing points that are not shown on the market day chart. These
must be laid out in the correct format. As long as the format is uniform, it will be sufficient for
angles.

OFFICIAL GANN CHART
A Gann format chart, as shown below, features four, six, eight and sometimes ten squares to
an inch. This brief look at the exact chart types Mr. Gann used himself is a familiar one to those of

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How to Profit From Applied Gann & Fibonacci

us veterans who have been exposed to Gann. One can draw this format or buy a program that
prints out these type charts. Trend lines are easily drawn and so are the "GANN ANGLES".

CHART 1
Soybeans and most grains use the eight squares (separated by dots) format. The S&P is another
that uses the 8 squares format. The chart illustration shows the Gann eight squares format as used
to analyze the DOW JONES. Whichever type of charts you use, the geometry will be the same.
MARKET BOTTOMS
The following can be applied to all markets. And all markets follow the same rules of buy/sell
pressure. When a market is approaching a bottom, we have several forces pushing it lower. First we
have the overall lack of buying.
It is most notable when the commercials are not active buyers. (It is said, "It takes a
tremendous amount of buying to push a market higher, but it takes a mere lack of it for it to go
down"). Along with this selling pressure by these same commercials, Banks selling mortgage rates,
Governments selling Treasury Bonds, etc; we have selling by small hedgers of the product being
traded such as Grain Elevators selling Soybeans. Finally there are those weak long positions who
just can't hang on to their long positions anymore and they bail right at the bottom.
Many times you see a market bottom with a large volume day and dramatic price drops fueled
by the worst news. If traders are in a "weak" long position, panic could set in and mass liquidation

5

Gene Nowell

could take place. Finally these weak longs throw in the towel. Most always we will see the worst
news at a market bottom. And the exciting good news at market Tops.

CHART 2
HIGH VOLUME AT BOTTOMS & TOPS
At this time, the profit takers cash in buying back their short positions. Now the speculators,
"Bottom Pickers", come in and start to buy. Then the commercials have found themselves short of
product so they must buy to maintain an inventory level. And when all the selling pressure is
finished and the dust has settled, the market commentators call it a "Short Covering Rally". Gann
said to watch the volume on these short covering rally's and count the days to see if the most recent
rally has lasted longer in time than any of the "Short Covering Rallies" since the market started on
the down trend.
If the volume is greater than that of the last short covering rally and if the time of this rally is
longer in terms of number of trading days look for a place to enter the market on the long side if a
pullback comes because this could be the first wave up in an ABC correction or the first wave of a 5
wave bull market. Always look for a cycle timing point or other indicator for trend change. Some
people use indicators to judge if the market’s selling has been exhausted. The Stochastic is probably
one of the most used by professional traders. Once set up to the parameters desired, it can show
cycle tops and bottoms.

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How to Profit From Applied Gann & Fibonacci

MARKET TOPS

When a market is approaching a top, there will usually be extreme volatility. Gann said John Q.
Public enters the market at these tops. Gann also said markets are working between the 45 degree
angles of the 360 degree chart (Square of 9) in price and time. Price is fluctuating freely between
these angles because they are widening as price goes higher. Getting back to the publics
participation, the news is great and people get caught up in the hysteria of the time.

CHART 3
The Above chart shows how high volume usually accompanies tops. This is a monthly chart of
Gold going back to 1982.
One Good example of this is the 1980 Gold and Silver run up. People blamed the Hunts for
doing it all, but it took the participation of the whole world for a market like this to happen. The
hunts were not buying Gold, just silver. I remember very clearly when Gold was $800 on its way to
a high of around $850, people were talking $1000 Gold and $100 Silver. Well Silver went to $52.00
and Gold Reached $850. The greedy hung on for the ultimate $1000 mark and went down with the
ship. The smart ones were selling all the way up. I was very fortunate to have been on the right side
of the Silver market both on the way up and on the way down. At the time I was in the Silver and
Gold business hedging my product.

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Gene Nowell

Gold had a tremendous move up in price from October 1979 to January 1980. Near the top,
the producers started spoon feeding the public news of shortages in Gold and how the mines were
drying up and their inability to supply the demand. News like the mines were not producing as
much etc, etc; at the same time, the producers were hedging (selling) the product they hadn't even
mined yet. This was done on "Forward Contracts" or the Futures Market. The result was the public
bought everything the mining company's could dish out. And other companies like jewelry
manufacturers were selling it to them in product form such as jewelry, bars and coins. This money

eventually went to the larger company's bank accounts and the "small guy" got it stuck to him once
again. This is why Gann strongly emphasizes to stay far from the news and the ticker. You won't be
able to see the forest through the trees.
To sum this up, I have come to a firm conclusion that there are very powerful and influential
people who have the news media at their control and they use this to their advantage. I therefore am
very cautious when major news comes out (good or bad) especially when we have seen a significant
price move, prior to the news, in the direction of the news. It's the old adage, "Buy the Rumor, Sell
the Fact"!

8


2- GEOMETRIC ANGLES & CHARTS
IMPORTANT GANN ANGLES
Gann stated that the ideal balance between time and price exists when prices rise or fall at a 45
degree angle relative to the time axis. Gann Angles are drawn from significant bottoms and tops at
various degrees. According to his writings, the most important angle is the 1 x 1. This angle reveals
if price is in a strong position (above the 45 deg angle) or a weak position (below the 45 deg angle).
Gann said that a 1x1 angle provides major support during an up-trend and when the angle is
broken, it signifies a reversal in the trend. Therefore, the most important angle is the 1x1.
Gann identified a total of nine significant angles. When a set of angles is drawn between any
two points the related market strength between these two points, are as follows:











8x1 = Extraordinarily Strong Trend
4x1 = Very Strong Trend
3x1 = Strong Trend
2x1 = Normal Trend
1x1 = Balance Line for Trend
1x2 = Norman Trend
1x3 33 Slow Trend
1x4 = Very Slow Trend
1x8 = Extraordinarily Slow Trend

When price follows one of these angles, the trend is identified for strength and a possible
change of trend or acceleration of the trend can be recognized when price moves to the next slower
or faster angle.
As a follow up on the 1x1, I have a radical way to use the Gann Fan. The 1x1 angle must
originate from a low or high and connect to the opposing swing. In other words, the scaling is
already on the charts. This is very helpful when trading on the intra-day charts. The following chart
is an example of my radical way of doing this. The One Hour Canadian Dollar (CAD)/Japanese
Yen (YEN) currency pair shows the symmetry of the angles and price.

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Gene Nowell

CHART 4
The Set of Gann Angles on this chart come down from the high and connects to the lowest
low of the move. The first wave up finds resistance at the 1x2. At this point, the continued rate of
decent is slower than the initial down move. Once price jumped to the next angle, the down trend

momentum shifted to the upside.
Gann also observed that each of the angles can provide support and resistance depending on
the trend. As stated earlier, when price breaks through one angle it has a high probability that it will
move to the next to find support or resistance.
A major reversal is signaled when prices fall below the 1 x 1 angle on an up move. Prices
should then be expected to fall to the next angle (1 x 2 angle). A rule of thumb is that price will
most likely consolidate on an angle that had S/R on the opposite angle of the 1x1. An example of
this is if price followed the fast moving angle 2x1 up and broke through the 1x1, then expect
price to consolidate on the 1x2.
Very high priced and very low priced securities will follow faster and slower moving angles.
The best functioning angle for support and resistance can depend on the price level and timing
point of the security being analyzed. Take the all time low price and high price and see where the
price is in relationship to these. The lower the price, the more likely the slower moving angles will

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How to Profit From Applied Gann & Fibonacci

offer support. And the higher the price, the faster angles will offer resistance. The 1x1 will always be
the most significant of all these.

11


3- TYPES OF CHARTS
With today's computer trading platforms & programs, the traditional Gann charts are not
necessary. However if you like using this type of format and feel like it is best for you, then
whatever works. When it comes to time frames, daily, weekly and monthly are the most commonly
watched. Other time frames such as 4 hour, 1 hour, 45 minute, 15 minute 5 minute are used in

various ways. Some traders use the lower time frames for entry. For the day trader the 1 hour, 15
minute and 5 minute charts are the norm. For the scalper the 1 minute, 5 minute and 15 minute are
used.
By studying each time frame to see where the Moving Average is in relationship to price we
can get the general direction of a trend. Always check the angles from the most recent high and low
to see where price is and whether it is in a strong or weak position. By looking back from where
price is, we can see where support resistance and time turning points have reacted in the past. This
will give us an idea of how they will relate to the current and future price. By doing so, you will have
a better idea of future support/resistance levels of price when approaching these angles. Chart 5
illustrates this with past support/resistance when a set of Fan Lines are drawn. The 90% angles have
price up against resistance.

CHART 5

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How to Profit From Applied Gann & Fibonacci

In Chart 6 the same Fan Lines are drawn from the same high into the future and you will see
price topping out around the 90% Fan Line angle.

CHART 6

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Gene Nowell

In Chart 7 resistance of the past has become resistance of the future.

CHART 7
I day trade and watch the 15 minute, 45 minute and 135 minute bar charts. Three times up in
each time frame. I am always on the lookout for the longer term trade so I can catch the larger
move. For this, I keep an eye on the 1 hour - 4 hour and daily time frames. At the end of each week
I study the weekly charts. When a set up occurs on the long term and short term charts, I have more
confidence to take a trade. Now I can look for long term support/resistance of price and angle
location and how price has reacted to it in the past.
As mentioned earlier, I also use the 15, 45 Moving Average along with the 135 MA when
looking for support/resistance. Along with these I use stochastic and RSI as guides. When either of
the MA comes in at the same point as an angle or long term support/resistance and price arrives at
that point the same time, there will be a high probability that trend will change. Chart 8 below
shows the evidence of this.

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How to Profit From Applied Gann & Fibonacci

CHART 8
The arrows point to the area of support. When the Fibonacci Fan line and the 55 MA come
together, this will always be an area to watch for price support or resistance.

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Gene Nowell

Let’s take a look at the Chart 9 below. I have drawn Fan Lines connected from a high to low.
In this illustration, I am using Gann numbers for my angle percentages. A set of angles moving up

or down are; 25%, 50%, 62.5%, 75%, 90%. In addition to these, the 112.5% and 125% can be used
as well. Gann tells us if price is trading below the 45 degree angle, then price is weak. Here, the 50%
angle is the same as the 45 degree angle and can be used to divide price. The difference is we have
market geometry already in place for us. What I mean is the two points of the HI and LO are our
connecting points. We do not have to consider scale because the scale is on in the range. Thus if
price is trading below the 50% angle, it is weak, above it, strong.

CHART 9

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How to Profit From Applied Gann & Fibonacci

Chart 10 below is the EUR/USD 4 hour chart with a set of Fan Lines that originate from a
significant high and go to a significant low. The first sets of angles were drawn high to low from the
left going down. Once the low was established, price moved up to the 62.5% angle (left arrow) and
moved down sharply. This live angle will prove to be significant resistance in the future (right
arrow). As you can see, once price bounced off the angle of resistance and came down a little bit
and moved sideways finding support on the 75% angle coming up from the low for a period of time
then moved to the 62.5% angle again and the result was resistance found and significant move
down.
A second set of angles was drawn from the low to the high where price bounced off the 62.5%
angle. What is so significant about this set is the length of time price followed the 75% angle up
coming from the low.

CHART 10
Chart 10 shows how price touched the 75% angle 5 times before finally breaking through to
the down side. One of Gann's rules can be seen here. That rule is: "WHEN PRICE HITS A
SUPPORT/RESISTANCE AREA 3 TIMES IT WILL ALMOST ALWAYS GO THROUGH IT

ON THE 4TH". In this case, it took 5 times to break through to the down side. This sometimes
happens when using intraday charts. When Gann put these rules in place, they were used in his daily
and weekly chart analysis. However, the basic principle can be applied to any chart with a little
variance. These patterns are not hard to recognize when you have structured geometry of past price
laid out in this manner. The hard part is waiting for price to give you a setup. And it is even harder
when you know it is going to break through and you have to get some sleep and the move occurs
during the night.
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Gene Nowell

STRENGTH AND WEAKNESS
Another significant use of these angles is being able to recognize market strength and
weakness. When price moves up and down on the charts, angles will give the trader a roadmap to
market strength of the current trend. Chart 11 illustrates this.

CHART 11
We can use the angles to tell if price is strong or weak. Chart 11 illustrates this. I am using
Fibonacci numbers for the Fan Angles. They are 38.2, 50, 61.8, 76.4, 90. (There is little difference in
price support resistance from Gann and Fibonacci). After the two geometric points have been
located and angles drawn, price shows support on the 76.4 % angle (marked with X). This 76.4 %
number is used at many trading desks around the world. Some find it to be the ultimate
support/resistance line before a big move takes place in the opposite direction. I am inclined to
think this to be true. In addition to this, the 90% angle is the last line of support before a market
collapse. Since price has fallen below the 50% angle, it is inclined to be weak. Let’s follow this 76.4
% angle out and see what transpires. Chart 12 is the next illustration of this setup.

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How to Profit From Applied Gann & Fibonacci

CHART 12
Price dipped down close to the 90% angle (marked with X) then immediately moved higher
and began to consolidate along the line of the 76.4 % angle before doing something dramatic as
shown in Chart 13.

19