the hAnDbook oF teChnICAl AnAlySISwith Point C, since the price at Point C has exceeded the previous peak at Point B.
The new levels have to be redrawn based on the new range, AC.
Figure 19.12 shows Apple Inc. finding support at the 50 percent level, as well
as at various other one‐eighth retracement levels as indicated at Points 1 and 2.
Gann Grids and the 45‐Degree Line
Once the scale or trend rate has been calculated, using either Approach 1 or 2 (as
described earlier), a Gann grid may be applied to the chart. Gann grids represent
lines of balance between price and time since half the lines are parallel to the main
1 × 1 line of balance. The other half of the lines run perpendicular to the parallel lines
of balance and represent an important barrier to price action. The grid size is based
on some ratio of the squared range, normally full size, half, or quarter of the squared
fiGure 19.11 Price Reacting at 50 Percent Retracement Level on the Continuous
Daily Chart of Caterpillar Inc.
Courtesy of Stockcharts.com
fiGure 19.12 Price Reacting at 50 Percent Retracement Level on the Daily Chart of
Apple Inc.
Courtesy of Stockcharts.com