Basics of Gann Analysis
Gann fan line. For example, if price breaches the 3×1 fan line, price is expected to
move toward the 2×1 fan line, and so on. Whenever price breaches a downtrending
Gann fan line to the upside, it is expected to move to the next Gann higher fan line.
For example, if price breaches the 1×4 fan line, price is expected to move toward the
1×8 fan line. This expected behavior is referred to by Gann as the Rule of All Angles.
Gann fan lines are drawn from historical and significant peaks and troughs.
Uptrending Gann fan lines are drawn from historical or significant troughs while
downtrending Gann fan lines are drawn from historical or significant peaks.
Uptrending Gann fan lines are invalidated once price falls below the trough from
which it was drawn and downtrending Gann fan lines are invalidated once price
exceeds the peak from which it was drawn.
For a 1×1 line to be plotted, the scale or trend rate must be known in advance.
Figure 19.21 shows the daily Gold prices reacting to the Gann fan lines based on
trend rates calculated using Approach 2.
Figure 19.22 shows the weekly Soybean prices reacting to the Gann fan lines
based on trend rates calculated using Approach 2.
Figure 19.23 shows the daily Coffee prices reacting to the Gann fan lines
based on trend rates calculated using Approach 2.
Figure 19.24 shows the four‐hour Sugar prices reacting to the Gann fan lines
based on trend rates calculated using Approach 2.
Figure 19.25 shows the weekly Corn prices reacting to the Gann fan lines
based on trend rates calculated using Approach 2. Note that the Gann fan lines
were invalidated after the time line associated with Point C, since the price at Point
C exceeded the previous peak A from which the original fan lines were drawn.fiGure 19.21 Prices Reacting at Downtrending Gann Fan Lines on the Daily Chart
of Gold.
Source: MetaTrader 4