W. D. GANN CYCLES FORECASTING HIGHS AND LOWS
W. D. Gann is most widely known for basing his trading and forecasting on market cycles. Gann's use of cycles provided him with a significant advantage in his trading, as he believed the energy of these cycles caused market movements before they occurred. Few share this advantage, as the precise application of these cycles largely remains unknown to others in the industry. Now, you too can benefit from this rare insight into the energy flow behind the scenes of capital markets. Gann employed various types of cycles in his trading and analysis. In his writings, the term "cycle" refers to a range of different market techniques, including alternating market legs, trend changes, regular periodic cycles, return cycles, and volume exhaustion cycles. To fully understand Gann's use and calculation of each 'cycle,' one must carefully examine the context in which Gann was writing, as different cycle types are discussed in different places. Each cycle has a specific application in the market and behaves in its own unique way. W. D. Gann's UP/DOWN alternating cycles described in his book, 'The Tunnel Thru The Air' get the most press. These are often touted as the "unicorns," or Holy Grails, of cycles. This page was created to explain and showcase Gann's alternating cycle technique, using Gann's Law of Vibration. Along the way we'll dispel some misnomers about these cycles. Further down the page you'll see some of these cycles mapped out. First, let's be clear- W. D. Gann discovered two types of alternating (UP/DOWN) cycles. Early on in his studies he came across "Cycles of Repetition." The second type, "Cycles of Progression," are the ones Gann favored. Cycles of Progression are superior, because their accuracy can be statistically proven between 83% and 93%. Cycles of Progression can provide a huge statistical edge in your trading, because they are precisely calculated based on a precise mathematical formula and variables well before the market data is available. Also, their sequence of cycle legs always alternates UP/DOWN for the life of the cycle. There are no silly 'inversions' where the sequence flips. In this way, these cycles retain their incredible predictive value. That's why we exclusively teach alternating Cycles of Progression in our "W. D. GANN: MASTER THE MARKETS" Training. In his book, 'The Magic Word,'Gann distances himself from the cycle of repetition technique, describing it as something inferior that is a primary step to cycle analysis. These were often inaccurate, averaging past market turns to extrapolate future turn times. In the cycles shown below, the green-colored cycle lengths in the examples below are 'up' cycle legs, and the red denote 'down' legs. After the cycle turns up, there should be a move of magnitude to the upside and the cycle leg should finish higher or even in price than when it began. After the cycle turns down, the opposite is predicted to be true. These cycles rarely stop or start on the exact high or low of the cycle leg period. If Gann's cycles perfectly hit the highs and lows of each market turn all the time, then how come he was off by over 20 days predicting the high of 1929- the hottest market year of his time? On YouTube you will see videos of people drawing lines between highs and lows claiming that each cycle leg (or feathering if several cycles) hits the exact highs and lows of every turn. W. D. Gann used the cycles in a different way. Each was a "wind at your back" long/short filter, or served as a trigger when the direction of a certain leg agreed with the predicted direction of a larger cycle or trend. You can gain a unique edge in your trading by using W. D. Gann's cycles, but only if you understand his specific trading rules for each type of cycle in each market. These rules, which Gann referred to as "methods of operation," vary depending on the cycle and market type. At times, Gann's rules for cycle trading involved pairing cycles together for confirmation. Gann often combined the Arcana Trend Cycle with Cycles of Progression. These rules provide detailed guidance on price action for entering, exiting, and managing each trade around the background cycle action. Without a solid understanding of these rules, it will be difficult to profit from Gann’s cycles in your trading. Here's a common misconception: Many claim that there is a wheel that shows the cycle leg's length, pitch, and peak price of that leg all on one angle and cell. However, we have several practical market demonstrations that prove this concept to be theoretically impossible. Gann’s price techniques were derived from a different discipline, and his projections often relied on the confluence of three distinct methods. When you have an accurate Cycle of Progression, the sequential UP/DOWN alternation of the cycle legs remains constant, even when a cycle leg fails our buy-and-hold test. The market energy still moves in the predicted direction during that cycle leg, and Gann's rules allow you to still profitably trade that cycle leg. The alternating sequence of the cycle still remains the same, despite a price failure in the previous leg. If the cycle inverted or the sequence suddenly changed, the cycle becomes useless for trading because it loses its predictive value. Back-testing just the Tokyo J-1 (also called RG-7) cycle assuming an uninterrupted "UP/DOWN" sequence on a buy-and hold basis, we show a consistent success rate of 84- 93% for the direction and duration of cycles legs over the last 10 years. Click here for back-testing results from trading the Tokyo J-1 using several sets of trading rules Gann prepared for this cycle. DISCLAIMER: Our legal counsel forbids us from posting future predictions. All charts copyright Arcanum Market Research, all rights reserved. Besides keeping detailed stats on cycle performance, we also pictorialize the actual data. Below you will find 10 years of the W. D. Gann's Tokyo J-1 Cycle and 8 years of Annual Cycles (Gann's 'Annulifier'.) Scroll through the gallery below to see all legs of this cycle from 2015 to 2024. All the cycles below were drawn out in advance of market data from an objective formula. The 2024 Annual Cycle on the SP 500 is about 75% complete. Looking good so far! Gann dubbed this annual cycle the "Annulifier" in his book,'The Tunnel Thru The Air.'
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W. D. GANN'S TOKYO J-1 CYCLE (also called RG-7)
2024 ANNULIFIER ANNUAL CYCLE
2023 ANNULIFIER ANNUAL CYCLE
The 2023 Annual Cycle on the SP 500 is complete. 88% of the cycle legs, predicted in advance, are successful! Gann dubbed this annual cycle the "Annulifier" in 'TheTunnel Thru The Air.'
2022 ANNULIFIER ANNUAL CYCLE
The 2022 Annual Cycle on the SP 500 is complete. So far 84% of the cycle legs, predicted in advance, are successful! Gann dubbed this annual cycle the 'Annulifier' in Tunnel Thru The Air.
2021 ANNUAL ALTERNATING CYCLES
The 2021 annual W. D. Gann cycle is now complete. 92% of the cycle legs succeeded in predicting direction and duration ahead of the market.
2020 ANNUAL ALTERNATING CYCLES
The 2020 annual W. D. Gann cycle is now complete. 92% of the cycle legs succeeded in predicting direction and duration ahead of the market. The cycle also endured the bounce from the most volatile time in US Index history.
2019 ANNUAL ALTERNATING CYCLES
The 2019 annual W. D. Gann cycle is now complete. Not bad, 89% of the cycle legs succeeded in predicting direction and duration ahead of the market. The cycle also held up pretty well during the black swan.
2018 & 2017 ANNUAL ALTERNATING CYCLES
The 2018 annual W. D. Gann cycle is now complete. Of note was the "message to the Fed" pattern that began October 3rdish. This was the same "fall for no apparent reason" that we ran into in August 2015. Same environment- the FED threatening to raise and the market yelling at them, "Don't you dare or we'll do this!" Suring this pattern the annual cycles saw the failure of two legs in a row. Very rare, but it denotes market manipulation against natural law. Once again, 89% of the cycle legs succeeded in predicting direction and duration ahead of the market.