From time to time someone on Twitter questions why a particular chart has so many lines on it. Often these questions are more rhetorical or mocking than genuine. Setting that aside, there are some who have a genuine interest in what the answer to the question is. The short version is that price occurs in multiple dimensions. To represent the space within which price occurs lines need to be drawn to accurately portray where support and resistance are.

Ultimately, there has to be a balance in constructing a chart between portraying an extremely complex reality and simplifying that reality in order to capture the essence of what is occurring. Some err on the side of constructing charts which are visually clean and uncluttered. Others err by constructing charts which attempt to capture every possible support and resistance line.

Some will look at the above chart and want to rip their hair out. However, there is logic to the chart's construction.

It is built based on a Gann Square. Utilizing the Gann Square, in conjunction with locking the price scale, allows time and price to be squared. Simply put, squaring time and price allows you to see when price has moved as far up or down as it is going to move during a given time period. Squaring time and price allows you to utilize the 45 degree line to gauge how strong or weak price action is and to form an opinion of whether price will move up or down.

Built upon the skeleton of the Gann Square and 45 degree lines are the following elements:

1. Pitchfans - A combination pitchfork and Gann Fan. They allow you to gauge how sharply price is rising or falling and tend to act as "natural"support and resistance;

2. Gann Fans (Angles) - A similar concept to Pitchfans. If built on a properly squared chart, Gann Fans are an effective tool to help determine the strength and direction of price movement all based around the 45 degree line;

3. Fibonacci Circles - If drawn within a properly squared chart, Fib Circles act as support and resistance. On this particular chart the idea/expectation is that price will likely reach its lowest level somewhere inside the smallest circle. Whether this proves to be true remains to be seen. Fib Circles are a great tool because you will start to see patterns. For example, price may bounce higher after touching or crossing below a Fib Circle, then move up and through another circle or two. Knowing this allows you to gauge how far a potential rebound may move before losing energy;

4. Fibonacci Spirals - Fib Spirals can capture some interesting support and resistance points on a chart that no other line is able to. One of the reasons spirals work is because price occurs in multiple dimensions and doesn't move in the straight lines that our two-dimensional charts depict it as moving;

5. Horizontal support and resistance line - The lines on the chart above are drawn (mostly) at points where two lines intersect. This chart, admittedly, has a lot of horizontal lines drawn on it which some chartists won't like. However, the idea between drawing a large number or horizontal lines is to see where the lines cluster together because those will be strong levels of support and resistance.

Just to reinforce some of these concepts, please refer to the close-up view of our original chart - particularly the last three candles. Notice how price began to turn lower once price neared/crossed above one of the Fib Circles? Price reversed just before touching the Blue Pitchfan.

Previously, the gold price rebounded after dropping to 1045.40. It did so near two Fibonacci Spirals, a Fib Circle and a Pitchfan line. Neither the rebound at 1045.40 nor the decline around 1306.00 were surprising because the multi-layered depiction of support and resistance echoed the multi-dimensional price action.

Yes, there are a lot of lines on the chart. You might strain your eyes to see what is going on. However, when you're trading its nice to know where the set ups and potential turns are. Sure, you can reduce the number of lines on the chart, but one of the reasons for drawing the lines is to create an objective framework within which to evaluate price movements and not adding lines on the basis of aesthetics, or erasing those lines, inserts a potentially subjective decision each and every time it is done.