Gann Angles: Basic Explanation

W.D. Gann (1878-1955) developed the use of what he called

"Geometric Angles", now commonly referred to as Gann Angles,
used to determine trend direction and strength, support and
resistance, as well as probabilities of price reversal.
Gann was fascinated by the relation of time (T) and price (P). Gann
drew his angles from all significant price pivot point highs and lows.
He used just one pivot point to draw an angle that rose (or fell) at
predetermined and fixed rates of speed, as follows:
T x P = n degrees
1 x 8 = 82.5 degrees
1 x 4 = 75 degrees
1 x 3 = 71.25 degrees
1 x 2 = 63.75 degrees
1 x 1 = 45 degrees
2 x 1 = 26.25 degrees
3 x 1 = 18.75 degrees
4 x 1 = 15 degrees
8 x 1 = 7.5 degrees
where
T is the number of units of time, graphically plotted on the
horizontal x-axis.
P is the number of units of price, graphically plotted on the vertical
y-axis.
x is read as "by".
n degrees specifies the slope of the Gann angle, measured in
degrees.
Translating time by price into degrees assumes a square grid, where
one unit of time on the x-axis takes up the same amount of
horizontal space as the one unit of price on the y-axis takes up

vertical space. For example, 1/16 of an inch might be set to one

week of time on the horizontal x-axis, and 1/16 of an inch might be
set to one dollar of price on the vertical y-axis. On such a
proportionally scaled chart, the 1 x 1 geometric angle, which for
every one unit of time rises one point in price, is a 45 degree angle.
Without this equality of time and price scaling, however, Gann
angles stated in degrees do not work out correctly. That would not
prevent correct Gann angles from being drawn on oddly
proportioned grids; it would only prevent the translation of time by
price angles into correctly-displayed degrees. But that would not
affect the interpretation of the Gann angles if we avoid thinking in
terms of degrees. Rather than thinking in terms of degrees, it is
simpler to express Gann angles in terms of units of time by price.
For practical purposes, weekly Gann angles, drawn on a weekly bar
chart, appear to offer the most useful perspective. Gann often said
that the weekly chart was more important than the daily chart.
Nevertheless, Gann angles are flexible and can be used on any timescale, so long as the time by price proportions are correctly
calculated.
Gann angles offer indications of support and resistance that may not
be evident based on any other method. For example, during an uptrend, the 1 x 1 angle tends to provide major support. A major
reversal is signaled when prices fall below the 1 x 1 angle.
According to Gann, prices should then be expected to fall to the next
angle below, the 2 x 1 angle. In other words, as one angle is
penetrated, expect prices to move to and consolidate at the next
angle, which is less steep.
Gann placed special emphasis on the 1 x 1 angle. On a perfectly
proportioned time by price grid, in an uptrend, the 1 x 1 angle
extends "northeast" at a precise 45 degree angle. This 1 x 1 angle is
the most significant angle: it represents a sustainable, perfectly

balanced trend, not too fast and not too slow, but just right. In a
bullish uptrend, the 1 x 1 angle tends to provide major support.
When this 1 x 1 angle is broken, a significant price trend reversal is
signaled. The price should then drop down to test the 2 x 1 angle,
below.
In a downtrend, the 1 x 1 angle extends "southeast" at a precise 45
degree angle. Eventually, after a downtrend, when price moves
above and stays above the 1 x 1 angle (which is sloping down and to
the right at 45 degrees), price should then make its way up to test
the next, less-steep Gann angle, the declining 2 x 1 angle. An angle
that provided resistance, once decisively broken, should provide
support.
Furthermore, when a 1 x 1 angle crosses a horizontal line extending
forward in time from a significant past pivot point price (an obvious
high or low), then time and price are square relative to that past
pivot point, and that is a likely time for a change in trend or an
acceleration of the existing trend. Also, when a geometric angle
crosses zero or another geometric angle, a trend change is likely.
Identification of the most important Gann angle is dependent of the
price level of the instrument analyzed: very high and very low priced
instruments will follow steeper and shallower Gann angles,
respectively. In other words, the best functioning Gann angle for
support and resistance depends on the price level of the instrument
being analyzed.