Trading Planetary Cycles Profitably
By Jeanne Long
The Natural cycles of commodity prices correlate beautifully with the natural cycles of the
planets in our Solar System. Each commodity has its very own special cyclical rhythm,
just as each planet has its own cycle. When combined they create a superb trading tool
(this is a fact W.D. Gann knew well).
One of the cycles we have investigated rides in tandem with the .uctuation of gold prices,
it is the passage (transit) of the planet Mercury through the area of the sky (zodiac) known as
Sagittarius. Heliocentric Mercury makes one complete trip around the sun every 88 days, and is
in the sign of Sagittarius for approximately 11 of those 88 days. Amazingly, this cyclical passage
correlates with the increase in gold prices about 75 percent of the time. In the remaining 25
percent the reverse is true, as prices fall or enter congestion.
A classic example of the type of price action to expect is shown on graph I. This classic
action calls for the price of gold to move up sharply while Mercury is in Sagittarius, then price
falls rapidly as it travels into the next sign of Capricorn. Each sign has 30 degrees, and we .nd
that prices tend to top out around the 26th degree of Sagittarius, which is the exact degree of
the Galactic Center. The Galactic Center is sensitive to the transit of all planets and therefore
is an important trading tool in itself.
Just how closely gold prices follow this classic example is dependent on other factors,
such as whether any other prominent planetary cycles are also in effect. If this is the case,
variables are created. The planetary cycles are cycles within cycles which all begin and end
at different points. It is for this reason that the actual price patterns of gold while Mercury is
in Sagittarius are never exactly the same. But there is more than enough similarity of pattern
for use as a viable trading tool.
There are several ways to utilize this phenomenon for trading purposes. It can be combined
with your favorite technical trading tools or used with my trading rules listed below.
1) Always BUY on the day before Mercury enters Sagittarius. Unless on that day a “key
reversal down” or “two-day reversal down” pattern forms, in which case SELL (see graph II).
Also if the close on the day in question is under a major trend line or if one of your favorite sell
signals is given, do not buy (If you sell instead of buy, you must reverse all the STOP, rules given
below). NOTE: Whenever key reversal or a two day reversal forms at the time of a planetary
signal, it greatly increases the validity of these two technical signals.
2) For the next three days following an entry into a trade, place a STOP at 1.50 below
the low of the day the trade was initiated.
3) After the third day, add a 45 degree trend line (Gann line) off the low, which would be
the nearest previous low or isolated low (see graph I). Each day thereafter place a STOP at
50 cents under the 45 degree line.
4) If you are stopped out in the .rst three days of the trade, immediately reverse your trade to
SELL. Be sure also to reverse all the STOP rules to monitor this short position.
5) If a key reversal down pattern should form within the .rst three days, reverse and be
short on the close of the key reversal bar. To qualify, this key reversal bar must be larger than
the previous days bar or be at least .ve points in range.
6) If a two-day reversal down pattern forms within the .rst three days, reverse and be short
on the close of the second day of the pattern.
7) WHERE TO EXIT THIS TRADE. Take trade off at the close on the day BEFORE
Mercury leaves Sagittarius.
8) Optional. If the last day of Mercury in Sagittarius is, for example on January 18, the three
days prior to the last day are January 15, 16 and 17. On each of these days place the STOP at
50 cents under the low of the previous day. If a key reversal down or a two-day reversal down
form on the last three days, take the position off at the close of that day.
9) Trade in units of two contracts. Take the .rst contract off at a .ve point pro.t and leave the
second contract on until stopped out or until rule number seven is initiated.
By following these rules and trading two contracts only from January 1986 to September
1988, the pro.ts were $18,850.00. This was just four trades per-year of eight days or less
in the market on each occasion. Combining this cycle with other planetary cycles and tools
increases the pro.ts tremendously, but also increases the exposure and risk. More methods
of trading with the planetary cycles are clearly illustrated in my book Basic Astrotech, which
is the result of many years of research.
Jeanne Long is the author of Basic Astrotech and the editor in chief of “A Traders Astrological
Almanac 1989.” International lecturer, she is a professional full time trader in Florida. You may
reach her at P.A.S. Inc. 2215 S. Federal Hwy. #22, Ft. Lauderdale, Fla. 33316.