This tool is a specific type of chart employed in technical analysis, often utilized by traders in financial markets. It is visually represented as a square containing a spiral of numbers, emanating from the center. Analysts use it to identify potential support and resistance levels, as well as possible price targets, based on geometric relationships within the numerical sequence. As an example, a trader might find a key number on the square that corresponds to a past high price, and then use the relationships within the square to project future price movements.
Its significance stems from its ability to provide a structured framework for analyzing price action and identifying potential turning points. The methodology is rooted in the work of a prominent market theorist who believed that markets operate according to specific mathematical and geometric principles. Practitioners believe it allows for the anticipation of market behavior based on these recurring patterns. Historically, its usage was often manual and time-consuming, but modern tools automate the process of generating and interpreting the chart.
