Great Traders: Fascinating Facts About WD Gann

Out of all the famous traders I have written about in this blog William Delbert Gann (1878 – 1955), also known as WD Gann, is certainly one quirkiest and most eccentric. He was a religious man who looked for inspiration in geometry, ancient mathematics and even astrology for his analysis methods and his disciples claimed that he was one of the most successful stock and commodity traders in history, while his detractors said that there’s no proof that he ever made a fortune from his trading. Despite the criticism some of his less esoteric analysis methods are used to this day. Here are some interesting facts about about WD Gann:

-He was born in a poor cotton farming family in Texas, USA and had ten brothers and sisters. His primary education was in the form of the Bible and the cotton warehouses, where he first learned about commodities trading. Later he attended a night business school and began working in a brokerage firm in Texarkana. He was able to open his own firm in 1903, called WD Gann & Company. 

-WD Gann was an avid writer, first publishing daily to even yearly forecasts about commodities and stocks trading, and later published a number of books on various topics – from technical analysis to science fiction.

-As I mentioned above, he looked for inspiration for his analysis methods in rather esoteric places, such as ancient mathematics, astrology and geometry. He firmly believed that the market moved in cycles and that everything that happened in it had historical reference points.

-He was a 33rd degree Freemason of the Scottish Rite Order.

-He developed a number of technical analysis tools, including the Gann Angles, which many traders use to this day, decades after his passing. However, I think it should be mentioned that the legitimacy of his methods has been questioned.

Whether WD Gann was truly a great trader or merely a celebrity “guru” is a matter of significant debate. One thing is for certain – he has left his mark on trading history.

The Uncertainty Around Brexit Makes Trading GBP/USD Riskier

The GBP opened the new trading week with a considerable gap of 170 pips, which shouldn’t be a surprise, considering the rumours that the UK is preparing to leave the single market, the Customs Union and the jurisdiction of the European Court of Justice. The British prime-minister is expected to make a speech before the Parliament on Tuesday, clarifying the government’s intentions about a “hard exit” from the EU.

From a technical analysis point of view the GBP/USD pair is in a key zone of support around 1.20 – 1.21, which could prove quite strong.

For the moment the pair is stuck in a relatively tight range around the support zone. Whether the market participants will attempt to recover the gap or not depends, I think, on what will be said in the UK Parliament tomorrow.

For the moment trading this pair is quite risky, because it is strongly dependable on the political and economic factors relating to the UK status in the EU and the expectation for a “hard exit” policy of the British government.

The RSI Divergences On The EUR/USD Daily Time Frame Point To A Rally Toward 1.11400

Although the potential for the EUR to start dropping still exists, it’s becoming clearer and clearer that the European currency won’t give up that easily and it will struggle against the USD.

One look at the technical picture is enough to notice the RSI divergences on the move to the downside between 18th Nov 2016 (1.05689) to 3rd Jan 2017 (1.03400).

I am specifically referring to several divergences, not just one of them. I have drawn five of them on the chart between the pair’s lows and the RSI lows.

The first divergence has almost reached its limit at 1.07434. If the next divergences reach their limits then there will be a move to the upside toward 1.10119, 1.10431, 1.11402.

The approximate time for reaching those limits is around four months, which is a rather long period. That is a rough approximation, but a trader who is expecting such a move to the upside can decide how to trade it best.

USD/CAD Broke Below The Support Trend Line

The pair broke below the support trend line around 1.3465 as I thought it would in my analysis yesterday. This is the first such breakout since the pair started moving in the consolidation channel on 1^st May 2016.

It is possible for the pair to retrace in order to test the breakout level. If does remain below the trend line, however, I think we can expect a considerable move to the downside. The limit of the trend channel, should it be reached, is around 750 pips, which means a possible drop towards 1.2430. Of course, these expectations are based on the weekly time frame, which means that such a move to the downside will develop in the long term. The closer target for the moment is at 1.2900.

In my opinion, the scenario for a move to the upside is becoming less and less likely at this stage.

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USD/CAD Continues Testing The Support Trend Line

The move to the upside from a few days ago was very short-lived and the pair formed a correction of only about 100 pips, before it fell to test the support trend line that can be best seen on the daily time frame.

There are less than 30 pips until USD/CAD reaches that trend line, and the expectation is that the pair will test it again, after failing to break below it for the past nine months of consolidation.

I think that if it does break below the trend line and manages to remain under it then its first target to the downside will be at 1.3000. In my opinion, however, the potential for a move to the downside is much greater than that, and the pair could continue dropping towards 1.2500.

If the pair fails to break below the trend line and remain there it will, I think, return within the range and it will start climbing towards 1.3350.

For the moment the latter scenario seems a lot less likely.

The GBP Is Falling Towards A Historical Support Zone

The expected move to the upside of the GBP/USD>>>  did happen, but the pair could not break above 1.2432. Said move to the upside was a test of the breakout of the support trendline (in red), which formed during the GBP consolidation between 7th October 2016 and 20th December 2016.

 Immediately after that the pair continued falling, and at the moment it is close to its lowest lows from 7th October 2016 (1.20129), 11th October 2016 (1.20883) and 25th October 2016 (1.20819).

In case the move to the downside continues and the pair breaks below the support zone you can see on the screenshot, GBP/USD could reach a new historical low, there is even a possibility to fall below 1.2000 or even below 1.1900.

On the other hand, if the support zone proves strong enough and the pair rebounds from it we could expect a new move to the upside towards 1.2300.