Detailed Explanation of Granville 8 Rules

what are Granville 8 rules

Granville 8 rules were proposed by an American investment expert named Jogepsbganvle after a long observation of U.S. stock prices. The rules can help traders determine the time for buying and selling by comparing positions of the currency price and the 200-day moving average and observing the moving direction of the 200-day moving average, as shown below :

Usage

Granville 8 rules suggest a good time to sell or buy for traders, as below :

1. As shown in figure 1, the moving average gradually flattens from the downward trend and begins to rise somewhat. At the same time, the currency price increases and surpasses the moving average. This is the time to buy.

1. As seen in figure 2 above, the moving average rises, the currency price runs above the moving average, and even if it falls, it can always stay up again before reaching the moving average. It is time to buy.

1. As seen in figure 3 above, the currency price rises above the moving average and then falls below it, while the moving average keeps rising. The currency price quickly recovers to surpass the moving average. It is time to buy.

1. As seen in figure 4 above, as the moving average decreases, the price of the currency falls below it. The currency price abruptly drops to a level distance from the moving average before picking up and heading toward the moving average again. It is time to buy.

1. As shown in figure 5 above, as the moving average is going up, the currency price is running above the moving average and keeps rising rapidly. The farther it moves away from the moving average, the more profits for traders to sell their assets. It is time to sell.

1. As shown in figure 6 above, the moving average gradually levels up from the upward trend, and the currency price falls below the moving average. It is time to sell.

1. As shown in Figure 7 above, the currency price runs below the moving average. It can pick up for a while but will go down again before reaching the moving average. The moving average continues to decrease throughout the process, even if it may level up for a moment, but it will always resume the downward trend as the currency price falls. It is time to sell.

1. As shown in figure 8 above, the currency price rebounds to surpass the moving average, runs above the moving average for a while, and then falls below the moving average as the moving average keeps declining throughout the process. It is time to sell.

Above is the daily price chart of Gate.io BTC contract, with all critical trading moments marked according to Granville 8 rules. Traders can determine when to buy and sell based on the chart.

Matters of attention

Please note:

1. Granville 8 rules prove more effective when the moving average covers a shorter trading period. The shorter the trading period, the more trading opportunities there will be. If the moving average covers a long trading period, determining the trading opportunities would be hard as the moving average with a longer trading period indicates fewer trading opportunities and gives trading signals later than market change.

Important principles:

1. When the moving average goes up and the currency price keeps above the moving average, it indicates that the market is buoyant. In such a case, if there is a time to sell according to Granville 8 rules, it means reducing positions, while the time of buying means buying assets or increasing positions.
2. When the moving average rises first, then levels up and then falls, and the currency price falls below the moving average, a bearish market can be expected. If the moving average continues to fall, with the currency price always running under it, it means the currency price is descending. In such a case, the time to sell according to Granville 8 rules means closing positions, and times of buying means buying assets and waiting for the price to rebound.
3. If we summarize the Granville trading principles in one sentence, it goes like “ increasing positions when the market is up, while deleveraging positions as it goes down“.

Summary

Following on from the last article, which introduced the foundations of the moving average, this article explains how to utilize the moving average to identify when to buy or sell in trading. Granville 8 rules, a traditional moving averages-based market analysis method, can be useful for traders to identify market trends and make wise decisions. There will be more articles on this subject. We hope users can master more analytical skills and succeed in the market.

Please click to register on the Gate.io contract platform to start trading!

Disclaimer

This article is for informational purposes only and does not constitute any investment advice, nor is Gate.io responsible for any of your investments. Content related to technical analysis, market judgment, trading skills, and traders’ sharing cannot be used on an investment basis. Investment may involve potential risks and face uncertainties. This article does not contain or imply any guarantee for returns on any type of investment.