# How To Use Gann Indicators

The more angles clustering in a zone. Another way to determine the support and resistance is to combine angles and horizontal lines. he or she is able to determine whether to buy on support or sell at the resistance. you will sometimes see many angles clustering at or near the same price. Uptrending angles provide the support and downtrending angles provide the resistance. daily) and properly scales the chart. These are called price clusters.Source: TradeStation Using a Gann angle to forecast support and resistance is probably the most popular way they are used. Traders should also note how the market rotates from angle to angle. Once the analyst determines the time period he or she is going to trade (monthly. the more important the support or resistance. This area becomes a key support point. This rule states that when the market breaks one angle. (For related reading. see Support & Resistance Basics. allowing the analyst to read the movement of the market inside this framework.) Gann Angles Determine Strength and Weakness . If you have a long-term chart. often a downtrending Gann angle will cross a 50% retracement level. Because the analyst knows where the angle is on the chart. The same can be said for uptrending angles crossing a 50% level. This is known as the "rule of all angles". This combination will then set up a key resistance point. weekly. 1X1 and 2X1 from main tops and bottoms. This technique frames the market. it will move toward the next one. the trader simply draws the three main Gann angles: the 1X2. For example.

Source: TradeStation The primary Gann angles are the 1X2. Finally. (For more insight. The strength of the market is reversed when looking at the market from the top down.) Gann Angles Can be Used for Timing . Since his charts were "square". read Gauging The Strength Of A Market Move. the market is in a strong uptrend. 4X1 and 8X1. the 1X1 angle is often referred to as the 45-degree angle. Anything under the 1X1 is in a weak position. Using the same formula. But using degrees to draw the angle will only work if the chart is properly scaled. A proper chart scale is important to this type of analysis. Trading at or near the 1X2 means the trend is not as strong. the 2X1 moves two units of price with one unit of time. angles can also be 1X8. When the market is trading on or slightly above an uptrending 2X1 angle. the 1X1 and the 2X1. 1X4. The 1X1 is moving one unit of price with one unit of time. Not only do the angles show support and resistance. Gann wanted the markets to have a square relationship so proper chart paper as well as a proper chart scale was important to his forecasting technique. The 1X2 means the angle is moving one unit of price for every two units of time. Trading on or slightly above an uptrending 1X1 angle means that the market is balanced. but they also give the analyst a clue as to the strength of the market.

The swing-chart lines are drawn over the top of the existing price plot and are used to remove undue noise from the securities price movement. and time relationships and how these relationships affect the market. Swing-charts can be drawn for all time scales. While each element has its own characteristics. an analyst needs to be able to identify these swings by using the correct time frame chart. low and close) and is the traditional method which Gann plotted price action on his charts. while at other times. As shown in the picture above is a minor swing-chart. Construction of the Swing-Chart The first type of swing-chart that can be constructed is the one-bar swing-chart. The first part of the Gann chart is the construction of the price plot. The focus of Gann Theory is to find the interlocking relationship between these three primary indicators of changes in trend and market direction. Applying a Few Gann Techniques to the Forex Markets Gann Theory can be described as the study of pattern.CONSTRUCTING A GANN CHART Gann used special charts called swing-charts to perform his analysis. In other words. in certain instances a pattern has a large influence on the market. each also has a unique. This price plot includes all the parameters of price (open. the destination of the trend line is significant if the price makes a higher high or a lower low. This is the basis of the swing-chart as constructed by Gann. It is the balance of these three . If the price bar does not make a new high or low the trend line continues in the same direction terminating at the same point of the next bar. this chart is also known as the minor swing-chart. monthly etc) as markets can display swings in various time frames. price. Gann constructed a swing-chart by drawing additional lines on the chart which represented the up and down movement of the security. Gann Theory looks at pattern. this is shown in the picture below. A trend line is drawn from each price bar to the next. A higher high will result in a green trend line being drawn to the high of the bar and a lower low result in a red trend line being drawn to the low of the bar. price and time exert their dominance. The technique is simple. what has been shown here is the simplest form of swing-chart. This forms the foundation for Gann charts. Following on from the price plot. You can see from the picture above the way Gann plotted price data on a swingchart. high. overlapping quality. and time as the key important elements in forecasting the future movement of the market. price. a trend line is drawn from each individual price plot to indicate the trend of the security. It is advisable to plot charts in multiple time frames (daily.