He believed the markets are geometric in design and in function, and they follow geometric laws when they’re charted. All of Gann’s techniques require that equal time and price intervals be used on the charts. Thus, a rise of one price unit over one period of time (1 x 1) will always equal a 45-degree angle. Gann believed that the ideal balance between time and price exists when prices rise or fall at a 45-degree angle relative to the time axis. This is called a 1 x 1 angle.
Gann angles are drawn between a significant bottom and top (or vice versa) at various angles. Deemed the most important by Gann, the 1 x 1 trend line signifies a bull market if prices are above the trend line, or a bear market if below the trend line. Gann felt a 1 x 1 trend line provides major support during an uptrend, and when the trend line is broken it signifies a major reversal in the trend. Gann identified nine significant angles, with the 1 x 1 being the most important.
Gann said each of his predetermined angles provide support and resistance depending on the trend. 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 angled trend line. Prices should then be expected to fall to the next trend line (the 2 x 1 angle). As one angle is penetrated, expect prices to move and consolidate at the next Gann angle.社区01表情图标 |