What Are Gann Angles?
Let me explain Gann angles to you directly. They're named after W.D. Gann, who created them. Gann thought these angles could forecast future price movements by using geometric angles that relate time to price. He was a market theorist from the 20th century, and while his ideas are out there, their real value and accuracy are still up for debate.
When you combine several of these Gann angles, they form what's called the Gann fan.
Key Takeaways
Here's what you need to know right away. Gann angles start with the 45-degree angle, which is the 1:1 angle. Gann saw this as crucial, with trends above it being strong and those below it weaker.
You apply these angles from price bottoms going up or from price tops going down. Other angles include 2:1, 3:1, 4:1, 8:1, 1:2, 1:3, 1:4, and 1:8. The idea is that once price breaks through one angle, it heads toward the next.
What Do Gann Angles Tell You?
According to Gann, the perfect balance of time and price is at 45 degrees. There are nine Gann angles in total for spotting trends and market behavior. If price breaks one angle, expect it to move to the next.
The key angle is the 1:1, or 1x1, which is 45 degrees. This means the asset increases by one price unit per time unit. But in practice, you can adjust the ratio to fit—stay consistent. For example, with the S&P 500 at 3,000, one point per day is tiny, so you might set it to 10 or 30 points per day for your 1:1.
You could also open a chart, draw a 45-degree angle, and overlay the Gann angles with 1:1 matching that. Always lock the scale on your price chart when using them—most platforms auto-adjust when you zoom, which messes up the angles.
Other angles are 2:1 (two points per time unit), 3:1, 4:1, 8:1, 16:1, and the reverses like 1:2, 1:3, 1:4, 1:8. These apply to both uptrends and downtrends. For instance, 1:8 means eight price units per time period, while 3:1 means three time periods for one price unit.
Example of How to Use Gann Angles
You start by watching for tops and bottoms on a chart. Then apply the Gann angles. Most trading platforms have a Gann fan or angles tool with these built in.
In an uptrend, if price stays above an ascending angle without breaking below, the market is strong. In a downtrend, if it stays below a descending angle without breaking above, it's weak. The specific angle it respects indicates the trend's overall strength or weakness.
The concept is that breaking one angle means price is likely heading to the next.
Take the SPDR Dow Jones Industrial Average ETF (DIA) as an example. I applied Gann fans from the late-2018 low. The 1:1 is at 45 degrees. Over time, the uptrend started respecting the 3:1 angle. Then price dropped further, breaking through all the up-trending angles. During the decline, you can apply angles from the high, descending lower, with 1:1 again at 45 degrees—use an angle tool to confirm that.
The Difference Between Gann Angles and Trendlines
Gann angles are fixed at specific angles, no matter how price moves. Trendlines, on the other hand, connect swing lows to lows or highs to highs, following the price action directly. So, they're giving you different info. Gann angles aren't drawn along price; they're independent of it.
Limitations of Using Gann Angles
Gann made his own charts with custom scales for time and price. Today's platforms auto-scale to fit the screen, so a 45-degree angle on one chart might not match another's if the axes differ. That means every trader could end up with different angles unless their charts are scaled exactly the same—it's highly subjective.
This tool isn't great for actual trade signals. Price often doesn't go straight to the next angle after breaking one, if it does at all.
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