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Gann Fan

This theory was developed by William Gann back in the 1930's. With this indicator you divide time and price in proportional parts.

Basics

The basics of the Gann indicator is placing a point at a major low or high and drawing the main angle. If you place the point at a major low, then the you are in an uptrend and for every unit of time the line also move a unit of price. This will create a 45 degree angle from the starting point.

Gann called this 45 degree angle the most important one. It is also called the 1x1 angle, because it moves at a rate of 1 time unit and 1 price unit.

Other important angles are:

  • 2x1
  • 3x1
  • 4x1
  • 8x1
  • 16x1
Each moving up faster than the previous.

When Gann angles are drawn together in a group on a chart they combine to create a Gann Fan.

Using a Gann Fan

Each line of the Gann Fan works as a likely support or resistance line. And it is likely that price will follow that line until the line is breached. If a line is breached you should look for support or resistance at the next line of the Gann Fan.

If price is trading around the 2x1 line, then price is strong.
If price is trading around the 1x2 line, then price is weak.
If price is trading around the 1x1 line, price is stable or balanced.

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