W. D. GANN'S ARCANA TREND FORECASTING
This page contains technical analysis beyond what most would consider possible. Have you been ambushed by a sudden change or end to an otherwise smooth trend? Wish you could predict time of chop and whipsaws ahead of time? Then keep reading....
The 'Arcana' trend forecasting mechanism is the crown jewel of the market techniques discovered by legendary trader W. D. Gann. The Arcana forecasts the direction and exact duration of the each trend. In intraday market activity, the Arcana also predicts sudden flips in the trend to the minute. Gann also discovered an entry method in the Arcana, as it pinpoints entries that coincide with the ends of moves against the trends (pullbacks or throwbacks.)
The value of this behind-the-scenes market blueprint presents to traders is obvious, but Arcana's unique insights offer ideal timing for hedging, over/underweight, rotations, and time value for options.
Gann's first book, "The Truth of The Stock Tape," is a coded manual of the Arcana. Subsequent books such as "Wall Street Stock Selector," "New Stock Trend detector," and "45 years on Wall Street" all serve as updates to his first book, because they contain valuable new rules as the Arcana morphed with changes to the US markets.
The Arcana tracks and measures the factors which influence mass psychology behind buying and selling in the markets. This is why Gann refers to it in his book, "The Tunnel Thru The Air" as a 'mind reading machine.' If you are one of those who have spent years following and trying to understand W. D. Gann, it may help to know that Gann intended his cycles and all other techniques to be acted on within the context of the Arcana trend. Without it, you simply will be unable to understand Gann's system or trade like him.
The shifts in mass psychology can be so swift and precise that the Arcana tracks them to within minutes on an intraday basis. Of course, during the year it is also used to predict periods of advances, declines, stagnation, and times to stay out of the market. Gann's rules tell us never to buck the trend. When he said this, he meant the trend that the Arcana was forecasting. He also warns traders to stay out of the market in times where the trend is confusing to read.
In the expandable daily chart of the SP 500 below, the Major Trend forecasts are shown by the large green and red arrows, and the text showing trend up or down. These charts was included in our Empire Market Letter published in February 2018. 'Empire' forecasted the major and minor trends from March 21st of 2018 through March 2019. These Major Trend change times are precise, and were dead on. More on trading the forecast below...
The pale green turn markers are the Minor Arcana turn times. Gann states that the market frequently makes moves against the trend, and that the ends of these runs can be identified and traded by the Minor Arcana.
The red and gray markers are also Minor Arcana turn times, but they mark the end of trend runs- great for times targets to exit positions. The purple markers are also Minor Arcana turn times, but occur during a no-trend period (marked by blue box on top of chart.) These mark the tradeable ends of sharp runs in a period of chop.
The green and red trend lines illustrate some basic technical analysis that we want to mix in, included as the entries in our market letter. In periods of up-trend, one may aggressively enter on a Minor Arcana turn time or wait for a trend line break.
82 YEARS OF ARCANA: 84%
Contact us for to see our back-testing log detailing the last 82 years (220 consecutive trend leg occurrences) of each trend leg of the Annual Arcana with consistent, objective rules predicting the direction and duration of each trend leg. The unfiltered result: 84% cumulative for all 80 years; 89% for the last 40 years.
On the Intra-Week Arcana, the above back-testing is pictorially displayed on via power point file going back to 2016. 84% seems average for each year.
18 YEARS OF GOLD: 90%
See below for the Yearly Arcana predicting the trend direction and duration for the last 18 years, including minor entry and exit times. The major trend directions and times are over 90% effective.
Why 18 years? In late 2001 changes were consolidated determining the CME/COMEX merger and New York came to control the price presentation for electronic trading around the world. This created a change that can be tracked from that time. So until any of those factors change, we anticipate this Arcana continuing to do its job.
20 YEARS OF EURO: 85%
We've decided to get a bit bold here and post the entire last 20 years of the Arcana on the entire annual history of the Euro (spot forex.) Don't worry- you won't be able to reverse engineer it:) On the Euro's entire history, the Arcana accurately predicted both the direction and the duration of the 54 trend leg signals 85% of the time. And many of the trend legs deemed "failures" significantly moved in the predicted direction for most of the trend time.
Also, we included the occurrences of the "Top & Bottom Finder" from 'Truth Of The Stock Tape.' This was Gann's technique for predicting top and bottom times within trends and time periods. You can scroll through and expand each year in the gallery below...