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Gann studies were introduced by W.D Gann and are used in technical analysis as indicators of support and resistance levels. Gann considered that angles and specific geometric figures had unique characteristics that could be used to point at the future price movement.
There are several types of Gann Studies:
Gann Lines,
Gann Fans
and Gann Grids.
Gann’s theory proceeds from the assumption that the angle of 45 degree serves as the basic support for a strong uptrend. On a chart using the arithmetic scale one point of change in price correcponds to one point of changes in time.
That is why Gann called this 45 degree angle “1 by 1”.
Gann also defined other important support and resistance lines, which correspond to the following angles.
1x8=82.5º
1x4=75 º
1x3=71.25 º
1x2=63.75 º
1x1=45 º
2x1=26.25 º
3x1=18.75 º
4x1=15 º
8x1=7.5 º
Gann studies consist of three basic areas as
Price studies – which consist of pivot points, angles and support and resistance levels.
Time studies.
Pattern studies – which consist of studying different trendlines and patterns.
What can the Gann studies tell us?
1) If the price falls below the “1 by 1 angle”, the change from an uptrend to a downtrend is at hand.
2). Other angles are considered to be transient support and resistance lines.
If the price breaks through one of the angles, it is justifiable to expect that it will continue its move to the following angle.
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