Gann fans, angles, grids and cardinal squares are some of the trading tools that allowed William Delbert Gann more than $500 million in profit in the early 1900s.
A Gann fans displays lines at each one of the 9 Gann angles. A Gann grid is an 80 x 80 grid where each line is 1 x 1. As a result, the lines will be spaced 80 time periods apart. Gann centred his technical analysis forecasting methods not only on price but also on time. He stated repeatedly in many of his books that time is as important as price when it comes to analysing market behaviour. Indeed, Gann angles and fans aim at forecasting not only the trend reversal but also when it would occur. Forecasting not only the price but also when it would materialize is invariably the ultimate outcome of technical analysis, and many analysts would indeed state that this is impossible.
Gann was indeed quoted stating that “When you know how to use time with price, you know how to trade”. Whether Gann fully revealed his Gann angles and fan techniques will always remain open to debate. But the main Gann angles theories on public record can be summarized as follows:
- Time and price are one and the same. When they are in sync (i.e. in a 1 x 1 ratio) then a major trend reversal is imminent from a technical analysis perspective
- Time is the most important factor. Day/week counts usually go in 30, 45, 60, 90 and 180 time periods
- Resistance levels in both time and price are 25, 33, 50, 66 and 75 per cent of the previous range. Using Gann angles they can be extended to 100, 150 and 200 per cent.
- Trend lines do work, and Gann claims authorship for these
Gann was a strong believer in the fact that human behaviour repeats itself over time and therefore analysing past behaviour allows forecasting the future.
The most frequent use of Gann angles and fans is in identifying support and resistance levels. But there are many other technical analysis methods that aim to achieve the same result, so what sets Gann angles apart from the rest?
Gann angles adds a new dimension to support and resistance levels insofar that they can be diagonal. When both move at the same time (i.e. are on the 1 x 1 line) then the market is in balance. Once one of the nine Gann angle lines is broken, the next angle line will provide the next support or resistance level.