The importance of a circle in a forecast

How cycles can be revealed by using a pair of compasses.

Introduction

There is a famous quote of W.D. Gann in his stock market course:

“There are three important points that we can prove with mathematics or geometry the Circle, the Square, and the Triangle. After I have made the Square, I can draw a Circle in it using the same diameter, and thereby produce the Triangle, the Square and the Circle.” W.D. Gann

Today, I will show you what a circle may reveal you about the future course of a stock market index or any other stock, or equity in the market you can trade upon and why W.D. Gann may have used a pair of compasses.

The below chart is from the $DJIA of the last 1.5 years. I always found it fascinating how the $DJIA fell into that low (June 18th 2021) and quickly recovered from it. It caught my eye as an important point in the and price.

From this chart you can easily see that the circle started around a seasonal date March 18th (when spring begins just 3 days later) and ended in September 20th 2021 when fall begins just 1 day later. In both occasions the Sun crosses the equator. In between the Sun moved 180 degrees, after which often a change in trend can occur.

Drawing a circle from that low into the high shortly afterwards revealed to me an important cycle and a couple of other points to ponder upon about the future direction of the stock market. This circle is actually a seasonal/natural cycle. They are important to watch.

From the price vector drawn from midpoint of circle to high the index declined but only to the point in time where time was up, at the end of the radius. The cycle has ended and a new cycle emerged. In between the beginning and end of this circle (cycle) the price went up and down until the cycle was over or time was up.

The top and bottom of this circle are usually aligned with future highs (resistance) and lows (past/future support). All price areas not easily to break or surpass. Although not exactly here, but the market had difficulties around this price level to continue its trend, or even to break the midpoint of this circle/cycle after the high in January 2022 was set.

Each of the diameter and radius of the circle can also be seen/used as smaller cycles within the bigger cycle, and you can use them and drag them as measured moves to other parts of the chart to see if there is match to validate a cycle form high to low, or low to high, or high (low) to high (low).

This could guide you into future points of support and resistance and a possible change in trend. That change in trend may most of the times be an important impulse wave in the opposite direction for a couple of days.

Next to this, you can use basic geometry and calculate the length of the circumference and treat it as a cycle.

I will show my paid subscribers it is worth doing all this work as you will be alerted of possible future changes in trend ahead of the crowd. Even into the current days.

Our paid subscribers here on Substack can continue to read this article below.

P.S.: On all of our communications, posts and analysis our Terms of Use and Disclaimer apply. Hypothetical or simulated performance based on past cycles have many limitations. Hence, past performance is no guarantee for the future. Anomalies can occur and cycles can contract, extend or invert. So, be careful and always watch the charts in front of you.