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How to Tell the Stock’s Trend Direction and Points of Support and Resistance

Updated on March 29, 2011

W. D. Gann

Once upon a time there was a guy called W. D. Gann who was a stock trader. W. D. Gann believed that speculation of stock or trading in stock should be handled as a business and not as a gamble. W. D. Gann was a great legend who is thought to have made over 50 million dollars as a stock speculator during his days. There is no documentary evidence to substantiate this. But he bought himself a plane in 1932 and hired a young 21 year old girl to fly him around as he observed crops to use in his trading speculations and predictions.

Speculations and Predictions

This W D Gann used Gann Square of Nine, Square of 144, Biblical numerology and other esoteric to arrive at his speculations and predictions. These esoteric I will never buy and I will not tell you to buy them. There are people out there who are making dollars upon dollars selling these methodologies. Why people like doing very difficulty work of selling such methodologies instead of applying the knowledge they claim to sell to the stock market and make the easier money for themselves is another story altogether.

Troughs and Crests Stock trading

Trend Direction and Points of Support and Resistance is based on higher highs, higher lows, lower lows and lower highs
Trend Direction and Points of Support and Resistance is based on higher highs, higher lows, lower lows and lower highs

Trend Direction and Points of Support and Resistance

W.D Gann’s motto of handle speculation of stocks as a business and not as a gamble is true up to this day. I like it. Another thing I would like to borrow from this Gann man is how he predicted trend direction and his evaluation of the points of support and resistance. If you would be interested in making success in trading the stock market, then I would urge you to borrow these from W. D. Gann

Handle Speculation of Stocks as a Business

But W.D Gann’s motto of handle speculation of stocks as a business and not as a gamble is true up to this day. I like it. Another thing I would like to borrow from this Gann man is how he predicted trend direction and his evaluation of the points of support and resistance. If you would be interested in making success in trading the stock market, then I would urge you to borrow these from W. D. Gann:

1. Crest

Crest: According to W.D. Gann, a crest is defined as a series of at least two consecutive higher highs. The placement of the corresponding lows is insignificant and should not be considered.

2. Trough

Trough: According to W.D. Gann, a trough is defined as a series of at least two consecutive lower lows. The placement of the corresponding highs is insignificant and should not be considered.

3. Uptrend

Uptrend is therefore defined to occur when a peak is formed followed by a trough and then followed by a higher peak.

4. Downtrend

Downtrend is defined to occur when a trough is formed followed by a peak and then followed by a lower peak.

5. Resistance

Resistance is defined as when the first peak has formed and the subsequent peaks will not penetrate above the peak point. This is resistance holding. If prices are penetrating or breaking out above the peak, then that is resistance falling. Resistance will form either in uptrend or downtrend.

6. Support

Support is defined as when the first trough has formed and the subsequent troughs will not penetrate below the trough point. This is support holding. If prices are penetrating or breaking out below the trough, then that is support falling. Resistance will form either in uptrend or downtrend.

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      stockmarkettrends 6 years ago

      Great analysis of Gann

      Mike

    working

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