In this article, I will review a technical analysis technique used to predict a change in market trend called the Price / Time Square. This is a technique that many associate with the late Great W. D. Anne.
The idea here is to start from the main market top or bottom price and calculate its “square”. At first glance, you might think this means just taking the price into account by multiplying it by yourself. Close, but not entirely true.
First, to resolve the issue over time, you would actually take the “square root” of the starting price. Take for example the weekly soy schedule. The week of December 5, 2008 put a major bottom in the market. Using this week’s minimum (my charts are adjusted backwards, so your price may vary slightly) at 626, you take the square root to get 25.02. Since the result is just above 25, it is inside the 26th square. To understand this, think that the first square has a value from 0 to 99. Then the second square would start from 1 to 1.99, and so on.
Starting on December 5, 2008, the weekly price column as a zero bar, you start counting the 26 price bands on the right. We arrive on June 5, 2009, which turned out to be a one-week price tag from the main top of the week on June 12, 2009. In a world of market terms the output is within a single price bar of a major change in market trend quite the edge to have.
Another misconception that exists in some is that if you calculate price / time, when “time” comes, “price” will be equal to the square of the original price. In fact, although it can happen sometimes, it’s not something to expect. Rather, as “time” approaches, the trader must look at the price to reach one of the “square” levels for which there will be more than one.
Using our original example of soybeans on a weekly chart, if we had to calculate a price level based on 360 degrees (circle), we would take the square value of our starting price (25.02) and then add 2 to get 27.02. Why 2? The full reason is beyond the scope of this article. But if you want to solve 1 complete cycle like on square nine (aka Cola Anna), get the square root of any number, add 2, then repeat it squared and you get the next 360 degree value that is on the wheel. In other words, you would have bypassed the steering wheel and returned to where you started, but the next cycle rises in price.
Anyway, now we recycle the square 27.02 and come around 730. So the first level at 360 degrees is at 730. The second will be around 834. The third at 939 and so on.
The market has reached several 5th level ticks (1146). On a weekly schedule it’s extremely acute.