Gann Fan
The Gann Fan is a technical analysis tool developed by the renowned financial analyst William D. Gann. It is used to predict future price movements in the market. The Gann Fan consists of a series of angle lines that extend outward from significant price points (such as highs or lows) at specific angles (like 1x1, 1x2, 2x1, etc.). Each angle line represents a relationship between price and time, helping traders identify potential support and resistance levels.
Definition: Gann Fan is a technical analysis tool developed by the renowned financial analyst William D. Gann, used to predict future market price movements. The Gann Fan consists of a series of angle lines extending from significant price points (such as highs or lows) at specific angles (such as 1x1, 1x2, 2x1, etc.). Each angle line represents the relationship between price and time, helping traders identify potential support and resistance levels.
Origin: The origin of the Gann Fan can be traced back to the early 20th century when William D. Gann was studying market price behavior and discovered the relationship between price and time. He developed this tool through extensive market data analysis and mathematical calculations and detailed its application methods in his writings.
Categories and Characteristics: The Gann Fan primarily consists of several different angle lines, such as 1x1, 1x2, and 2x1. The characteristics of these angle lines are as follows:
- 1x1 Angle Line: Represents a 1:1 ratio between price and time, often considered the most important support and resistance line.
- 1x2 Angle Line: Represents a price change rate twice that of time, typically used to identify stronger support and resistance levels.
- 2x1 Angle Line: Represents a time change rate twice that of price, typically used to identify weaker support and resistance levels.
Specific Cases:
- Case One: On a daily chart of a stock, a trader notices that the price starts to rise after hitting a significant low. By drawing a Gann Fan, the trader can see that the price encounters resistance at the 1x1 angle line and then retraces. This helps the trader confirm the validity of the angle line and buy when the price retraces to the support line.
- Case Two: In the forex market, a trader uses the Gann Fan to analyze the trend of a currency pair. The trader finds that the price gains support at the 2x1 angle line and then rebounds. Based on this, the trader judges the support line to be effective and buys when the price approaches the support line.
Common Questions:
- Question One: How are the angle lines of the Gann Fan drawn?
Answer: Angle lines are typically drawn from significant highs or lows, extending outward at specific ratios (such as 1x1, 1x2, 2x1, etc.). - Question Two: Is the Gann Fan applicable to all markets?
Answer: While the Gann Fan can be applied to different markets, its effectiveness may vary depending on market volatility and the trader's experience.
