"TIME is the most important factor in determining market movements and by studying the past records of the averages or individual stocks you will be able to prove for yourself that history does repeat and that by knowing the past you can tell the future. There is a definite relation between TIME and PRICE. Now, by a study of the TIME PERIODS and TIME CYCLES you will learn why tops and bottoms are found at certain times and why Resistance Levels are so strong at certain times and bottoms and tops hold around them. The most money is made when fast moves and extreme fluctuations occur at the end of major cycles."
-- Forcasting by Time Cycles Course – W.D. Gann
Its really about timing the market.
The Time Factor is a phenomenon which exists in all financial markets. Once understood, it is a powerful tool that can allow you to calculate predictable and repeating market cycles so that you can better time your investment decisions. I am not only convinced that a Master Time Factor exists in all financial markets, I am certain that it is present because I have seen it. I have also been able to predict it occurring within the markets time and time again.
Understanding how the Time Factor works has allowed me to calculate and share in writing, future dates to watch which have been accurate at forecasting major market turning points almost to the exact day, years in advance.
Gann developed the theory that there is a discernible relationship in all financial markets between price and time. He believed that the geometric representation of price through time revealed important cyclical patterns in markets that had predictive values.
Many have explained in different variations the premise for why Gann’s theories work. The most simple that resonates with me however is that as human nature will never change, history is destined to repeat itself.
In W.D. Gann's Commodities Course (1946) , chapter #7 entitled "Forecasting Grains by Time Cycles" Mr. Gann says: "The Great Time Cycles are most important because they record the periods of extreme high or low prices. The cycles are 90-Years, 82 to 84 Years, 60 Years, 45 Years, and 20 Years." (p. 161)
90-Year Cycle: “When we start from Sunrise or the Horizon and measure to Noon, we get an arc of 90 degrees, which is straight up and down starting from the bottom. 90 months or 90 years is a very important time period. The 90-Year Time Cycle is one of the very important ones because it is two times 45. This time period must always be watched at the end of long time periods.
For example: 1932 was 90 years from 1842. Study the Wheat prices around this time. 1850-1851 – add 90 years and we get 1940-41. Note low prices of Wheat around that time.
1855, June, high for Wheat 170. 90 years from this period gives 1945. Wheat reached high in June, selling at 170, some contracts at 168 and 169.
1850-51, extreme lows for Wheat. Add 45 years and we get 1895 when extreme low was reached. From 1895 we again add 45 years and get 1940.”
84-Year Cycle: “This repeated 84 years from 1845 to 1852 and brought low prices in 1929 to 1933.” The 84-Year Cycle alerts us to be prepared for low prices 84-Years from 1929 to 1933. The 84-Year Cycle projects low prices in 2013 to 2017.
Gann referred to the “Great Cycle – Master Time Period – 60-Yearsthe 49-50 Year Cycle, and the 30 Year Cycle (see chapter #12).
Great Cycle – Master Time Period – 60 Years: “This is the greatest and most important cycle of all, which repeats every 60 years or at the end of the third 20-Year Cycle. You will see the importance of this by referring to the war period from 1861 to 1869 and the panic following 1869: also 60 years later – 1921 to 1929 – the greatest bull market in history and the greatest panic in history followed. This proves the accuracy and value of this great time period.”
45-Year Cycle: “The digits 1 to 9 when added together total 45. 45 is the most important angle. Therefore 45 years in time is a very important cycle. One-half of 45 is 22 ½ years or 270 months. One-fourth of 45 is 11 ½ years or 135 months, which is three times 45. You will note how important these points are on the 360 degree Circle Chart.”
30-Year Cycle: “The 30-Year Cycle is very important because it is one-half of the 60-year cycle or Great Cycle and contains three 10-year cycles. In making up an annual forecast you should always make a comparison with the record 30 years back.”
20-Year Cycle: “One of the most important Time Cycle is the 20-year cycle or 240 months. Most stocks and the averages work closer to this cycle than to any other. Refer to analysis of the “20-Year Forecasting Chart.”
In order to predict Gann used various square calculators; Square of 9, 52, 90 & 144 were among his favorites.