In chapter three of W.D. Gann’s book, “How to Make Proﬁts in Commodities,” Gann states, “Time is the most important factor of all and not until sufficient time has expired does any big move start up or down. Time must be allowed for accumulation or distribution before the trend can change.”
Once you are aware of when these natural timing points occur, the next step is to watch for the G-A-N-N2 Buy/Sell price pattern to form. This pattern allows plenty of time (3-4 weeks) to visually see accumulation or distribution to take place.
The May 1989 coffee trade starts from the zero degree natural cause and effect week of February 20, 1989, marked (G) on the chart. The high price of January 3, 1989, at 159.20 to the low price on February 21, 1989 at 122.90 was 3 squares of 90° on the Gann Wheel.
Next, follow Gann’s rule #25, page 44 in “How to Make Proﬁts in Commodities,” “Don’t guess when the market is at bottom. Let the market prove it is at bottom.” From the low in May 1989 coffee at 122.90 a rally occurs into the week of March 13, 1989, making a high in price on March 17, 1989 at 135.24. This was one square of price 90 degrees from the 122.90 low and 180 degrees opposition from the 159.20 high of January 3, 1989 on the Gann Wheel, marked (A) on the chart. Three market days later, on March 22, 1989, as the accumulation pattern continues to build, the low or (N) marked on the chart, is put in place. The following day the (N2) of the price pattern is formed. From this point, more time is needed for the price to drop below the (N) low to trigger our actual buy recommendation on the P/R Futures Hotline broadcast, to buy one contract of May ’89 Coffee @126.15 on 3-28-89. Initial protective stop 124.15. On the Sunday, April 2nd P/R Futures Hotline broadcast, the protective stop was raised to 125.45.
On the Tuesday, April 4th, P/R Futures Hotline broadcast, the protective stop was raised to our break-even entry point of 126.15. On the Thursday, April 6th P/R Futures Hotline broadcast, the stop remained at 126.15. On the Sunday, April 9th P/R Futures Hotline broadcast, the protective stop was raised to 128.15. On the Tuesday, April 11th P/R Futures Hotline broadcast, we recommended an additional long contract of May ’89 Coffee @ 1st Order Vibrational Price Support of 131.95 M.IT.
The protective stop was raised on the entire position to 130.15. On Wednesday, April 12th, we bought @ 131.95. On the Thursday, April 13th P/R Futures Hotline broadcast, we recommended to hold the 2 long May ’89 Coffee contracts with a protective stop @ 130. 15. On the Sunday, April 16th, P/R Futures Hotline broadcast we recommended to buy a third May ’89 Coffee contract at 2nd Order Vibrational. Price Line Support @ 134.30. The protective stop was raised on the entire position to 131.15, which was just below the ﬁnal Major 1 st Order Vibrational Price Line Support of 132.85. This ﬁnal Vibrational- Price Line Support @ 132.85 must hold in order to maintain the up trend in May ’89 Coffee. A price breakdown below this level would reverse the psychology of the Coffee market, thus turning the trend decisively lower below the 2nd Order Vibrational Price Line Support of 134.30. The last line of major support was 90° lower at the 1st Order Vibrational Price Line of 132.85, as mentioned previously. l 32.85 was the opening price and the exact low of the day where we bought the third May ’89 Coffee contract @ 132.85. Protective stop is 131.15 on the entire position. On Monday, April 17th, this ﬁnal Major 1st Order Vibrational Price Line of 132.85 held and launched a major rally to close that day @138.85. Once again, the market has proven itself by picking up the energy for launch at the Major Vibrational Price Line Support on the Gann Wheel, conﬁrming to all P/R Futures Hotline Subscribers, the major trend remained very bullish.
On the Tuesday, April 18th P/R Futures Hotline broadcast, we recommended to sell 2 contracts of May ’89 Coffee @141.90 M.I.T., which was the Vibrational Price Line objective on the Gann Wheel, as well as a 50% retracement at the center of gravity from the contract high on 1-3-89 @ 159.20 and the 3-21-89 Low @ 122.90.
On Thursday, April 20th, we sold 2 contracts on May ’89 Coffee @141.90. On the Thursday, April 20th P/R Futures Hotline broadcast we recommended selling the remaining contract on the open Friday, due to 1st notice day on the May ’89 Coffee.
On Friday, April 21 st, we sold the remaining contract @ 139.10. The closed proﬁt on the three long May’89 positions was $11,981.25 in 19 market days.
- The Gann Wheel on May 1989 Coffee By Jim Purucker and Pat Reda