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I an article I read yesterday the author says that this is a key to Gann speed lines and represents the "squaring" of price and time (ie where price equals time).
Cavet:
Gann set certain relationships between the number of grid units of time to price. Most of the examples I have found are in relation to daily charts or longer. In his day an intraday chart would have to have intraday prices via a ticker tape and making the chart would be very difficult and time consuming.
In electronic charts the relationship between horizontal and vertical is fungible. I have notice that NT speed lines cross a horizontal at one time at a certain compression of the time axis and at another at a different level - even though the speed line should adjust and give the same result.
Therefore testing the speed lines on an electronic chart would, I believe, require creating lines with a computation and drawing an line segment or ray manually.
Here I am moving the estimate process to a real world trading example.
The price (50% retracement) and the time (150%) are shown.
I have created a trading rule
"Once price estimate has been achieved and you have a bar close below the estimate {provided the time has been achieved} sell at the next bar (using a limit sell with the close or a market order)."
AS the price retracement was 54.75% versus 50%
I have taken the time length of the initial downleg and multiplied it by 1.5475
=0.4025 days
Then there is a weekend coming up so I have added that time length (the ES is closed) to the estimate
giving a time estimate of 06/26 06:36 PM
for the completion of the downleg2.