The Gann fan, is a tool in trading, used to indicate price movements from important highs and lows and also used to identify price breakouts. This technical analysis tool it’s used frequently to identify trends, their angle and sign of exhaustion.
This tool is formed by lines that start from the same point with different angles. It is similar to the Fibonacci fan, but the angles between the lines that make up the Gann fan are 45 degrees angles.
William Delbert Gann developed analysis techniques all of them based on classical geometric patterns and angles whose relationship, according to Gann, allows us to correctly predict future market movements in both time and price. The Gann fan is constructed based on the Gann angles.
To use Gann analysis techniques, and therefore to use the Gann fan, the ideal is to use the same price and time intervals on the chart. This relationship is known as 1 × 1: a price unit goes up or down for a unit of time, this movement will give an angle of 45 degrees. Gann believed that the ideal relationship between price and time was when price rises or falls at a 45-degree angle to the time axis.
Although Gann proposes more angles, 1 × 1 or 45 degree, is the most important and the trend line formed at this angle is used to determine the trend.
A bull market is one in which the price is rising and is moving at the top of the 45 degree line.
A bear market will be one in which the price is falling and is moving below the 45 degree line. The price breakout of this Gann fan line will predict a trend reversal.
Gann 9 angles
- 1×8 – 82.5 degree
- 1×4 – 75 degrees
- 1×3 – 71.25 degree
- 1×2 – 63.75 degrees
- 1×1 – 45 degree it’s the most important
- 2×1 – 26.25 degrees
- 3×1 – 18.75 degrees
- 4×1 – 15 degrees
- 8×1 – 7.5 degrees
How to apply Gann fan tool in your chart using tradingview?
To apply the Gann fan, first select this object from the object tree and then indicate its starting point on the graph, then, holding down the mouse button, you have to extend the tool to the next point, while doing this process you will see the Gann fan drawing
The Gann fan is managed through two points and they can be moved using the mouse. These two points are used to position the trend line of the Gann fan on the chart.