Gann Theory

Gann Theory

Gann Fans, created by W. D. Gann, are based on prices moving in predictable patterns. Gann’s theory is based on time/price movements with the 1 time unit by 1 price unit (i.e. 1 x 1) being the main angle (45-degrees). However, there are other angles such as the 1 x 2, 2 x 1, 1 x 4, 4 x 1, etc. Gann Fans are drawn from major price peaks and bottoms and are used to show trendlines of support and resistance. The following Gann Fan (1 x 8) is shown on the price chart of Corn futures:

 

The price of Corn futures was held up by a support line that rose at a rate of 8 price units by 1 time unit (1 x 8). The chart of Wheat below shows both an upward Gann Fan and a downward Gann Fan, both the 1 x 8 angle:

In the chart of wheat futures above, wheat prices were held up by the 1 x 8 support line. When wheat prices peaked and subsequently began to fall, wheat was held down by the 1 x 8 resistance line. Gann Fanns are an art and involve intense study by potential users. The fact that the creator W. D. Gann wrote most of his studies on Gann Fans and angles in a cryptic language doesn’t help the potential student of Gann Fans either.

 

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