Chapter 9 | 3 min read

Natural Resistance Levels

Introduction

Gann described natural resistance levels based on how humans count. We count in tens using our fingers, and we treat 100 as a base, like par value. Therefore, fractions of 100, such as 25, 50 and 75, become natural levels where prices stop. Gann also gave special importance to the number 9, the highest single digit.

Natural Levels Based on 100

In order of importance:

  • 1/4, 1/2, 3/4: 25, 50, 75
  • 1/3, 2/3: 33.33, 66.67
  • 1/8 points: 12.5, 37.5, 62.5, 87.5
  • 1/16 points: 6.25, 18.75, 31.25, 43.75, 56.25, 68.75, 81.25, 93.75

Applying to Indian Prices

These fractions apply to every 100-point block and scale up for higher prices:

  • Stock around Rs 400: watch Rs 425, Rs 450, Rs 475, Rs 500.
  • Stock around Rs 2,000: watch Rs 2,250, Rs 2,500, Rs 2,750, Rs 3,000.
  • Nifty around 24,000: watch 24,250, 24,500, 24,750, 25,000.

Round numbers like Rs 500, Rs 1,000 and Nifty 25,000 are strong psychological levels because many traders place orders there.

The Number 9

Gann said 9 is very important because it is the highest digit. Important levels based on 9 include 9, 18, 27, 36, 45, 54, 63, 72, 81, 90, 99, 108, 117, 126, 135 and 144. Half points based on 9 are 4.5, 22.5, 31.5, 40.5 and so on.

He also noted that 12 is 9 plus one-third of 9, linking it to his Master 12 chart. Levels like 144 (12 x 12) are especially important.

Scaling the Number 9 (Illustrative)

  • Stock around Rs 700: watch Rs 720 (9 x 80) and Rs 810 (9 x 90).
  • Stock around Rs 1,400: watch Rs 1,440 (144 x 10).
  • Nifty: 22,500 (2,500 x 9) and 24,300 (2,700 x 9) are 9-based levels.

Time Too

Gann said these same numbers apply to time: 9, 18, 27, 36, 45, 90, 144 days, weeks or months from a top or bottom. You will learn more in the Gann Time Cycles course.

Example: Confluence (Illustrative)

A stock falls from Rs 1,000 to Rs 700. Its 50% retracement is Rs 850. The natural level Rs 850 (a 1/2 point of the Rs 800 to Rs 900 block) matches exactly. On the rally, Rs 850 is a strong resistance. If the stock crosses and closes above Rs 850, the next natural level is Rs 875 and then Rs 900.

Use on GoPocket

When placing orders on the GoPocket app, remember that many traders cluster orders at round numbers. For buys, place your limit order slightly above a round-number support; for stop-losses, place them slightly below it to avoid obvious stop-hunting levels.

Frequently Asked Questions

Why do round numbers work?

Because many traders and institutions use them for targets and orders, creating real supply and demand there.

Is the number 9 method proven?

It was Gann's belief. Test it on your stocks and use it with other confirmation.

Key Takeaways

  • 25%, 50% and 75% of each 100-block are natural levels.
  • Round numbers are strong psychological levels.
  • Gann gave special importance to 9 and 144.

Disclaimer: Illustrative levels only.