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The four signals

Every signal answers two questions: where do I get in, and where am I wrong?

Gann's method splits a market into swings. While the trend is up, the method buys the dips; while it's down, it sells the rallies. When price breaks the last swing against the trend, the trend has changed and the method switches sides.

That gives four signals: two that follow the trend, and two that catch its turn.

Continuation buy (COTB)

The trend is up. Price dips for at least three counted days (page 2), then trades above the previous day's high. The entry is a buy above that high. The stop sits below the low of the dip: if price goes back there, the dip wasn't a dip.

Tesla (TSLA), November 2024: a continuation buy. The uptrend dipped for three counted days. The entry was a buy at $248.90, above the last dip day's high, with the stop at $238.88, below its low. It filled the next day, and within five trading days the stock had traded $109.74 above the entry. From our published signals and the daily prices after them. Chosen as one of the clearest US examples of the signal, to show the mechanics: not a typical result.

Continuation sell (COTS)

The mirror image. The trend is down, price bounces for at least three counted days, then trades below the previous day's low. The entry is a sell below that low. The stop sits above the high of the bounce.

Tesla (TSLA), February 2025: a continuation sell. The downtrend bounced for three counted days. The entry was a sell at $353.67, below the last bounce day's low, with the stop at $367.34, above its high. It filled the next day, and within five trading days the stock had traded $65.63 below the entry. From our published signals and the daily prices after them. Chosen as one of the clearest US examples of the signal, to show the mechanics: not a typical result.

Change of trend, down to up (COTD2U)

The trend is down, but price breaks above the last swing high. The downtrend is over. The entry is a buy at the swing high itself, as price trades above it, with the stop below the downtrend's most recent low.

Medtronic (MDT), January 2025: a change of trend, down to up. Price broke above the last swing high, so the entry was a buy at that level, $81.78, with the stop at $79.52, below the downtrend's most recent low. It filled the next trading day, and within five trading days the stock had traded $6.85 above the entry. From our published signals and the daily prices after them. Chosen as one of the clearest US examples of the signal, to show the mechanics: not a typical result.

Change of trend, up to down (COTU2D)

The trend is up, but price breaks below the last swing low. The uptrend is over. The entry is a sell at the swing low itself, as price trades below it, with the stop above the uptrend's most recent high.

Bank of America (BAC), February to March 2025: a change of trend, up to down. Price broke below the last swing low, so the entry was a sell at that level, $45.94, with the stop at $48.08, above the uptrend's most recent high. It filled the next trading day, and within five trading days the stock had traded $5.33 below the entry. From our published signals and the daily prices after them. Chosen as one of the clearest US examples of the signal, to show the mechanics: not a typical result.

Why the change-of-trend stops are wider

A continuation signal enters at the end of a short dip or bounce, so its stop is only a few days' range away. A change-of-trend signal enters at a swing high or low, and its stop sits at the other end of the most recent move, which is often further away. These signals usually risk more per share.

That doesn't make them worse trades. A change of trend can start a long move, and the extra distance is simply a larger risk per share. Page 6 shows how the size of a position takes account of it, so the risk in dollars stays the same.

Next: Entries and stops. Or see the signals on today's market: the free signals show the four types on real Dow stocks.