The Concept of Squaring
A market squares out when the number of calendar units elapsed in a move equals the number of price units moved. When this relationship is achieved, the market enters a zone of extreme geometric significance — where the forces driving the initial move are exhausted and the probability of reversal is at its highest.
How to Identify Squared Moves
Identifying a squared move requires precise measurement of both time elapsed and price moved from a significant starting point. When these two measures approach equality — or achieve equality in their square root relationship — the market has squared out.
Squaring Using Different Scales
Squaring does not only occur when raw price and time numbers are equal. Gann recognised multiple forms: the squaring of the price range with the square root of time; the squaring of price range with degrees of a circle; and the squaring of significant price levels with the calendar date.
Trading with Squared Relationships
Trading based on squared time and price requires patience and precision. The analyst identifies in advance the future time and price zones where squaring is likely to occur, then waits for market action to confirm the relationship before entering.
When time and price balance — when the market has moved as far in price as it has in time — the equation resolves. What has gone up must come to a point of exhaustion. This is not speculation. It is mathematics.