Gann Indicator Explained 2024: Mechanics, Strategies, Examples

Forex Trading19 أكتوبر، 2022

gann fan indicator

In the chart of wheat futures above, wheat prices were held up by the 1 x 8 support line. A Gann Fan displays a series of nine diagonal lines at each of the nine Gann angles. Using Gann Indicators in your trading approach can give special views on how the market moves, helping you see possible trends and turning points. But to succeed with Gann Indicators, you need a mix of deep learning, putting them into use practically, and practicing regularly. Keep trying to draw Gann Angles and Squares on various charts and over different periods of time. The components of Gann Fans include an anchor point, which serves as the reference point, and fan lines that represent different angles derived from Gann’s studies.

  1. These are price levels where the market direction has changed meaningfully.
  2. Drawing angles to trade and forecast is probably the most popular analysis tool used by traders among all W.D.
  3. Gann believed that when price and time move in sync, then that’s the ideal balance of the market.

Step #3: Apply again the Gann Fan Indicator on the Swing low Prior to the Breakout above 2/1 Gann Fan Angle

Gannzilla is a trading software that is designed to help traders incorporate the Gann analysis into their trading strategy. It provides a range of tools and features that make it easier to use Gann indicators, including the Gann fan, in a more effective and efficient manner. On the other hand, a trendline is created by connecting bottoms to bottoms or tops to tops, and it is matched to recent price action.

#4 Trend Analysis – Downtrend

The Gann Fan indicator was conceived by William Delbert Gann, an esteemed financier born on June 6, 1878. Gann’s contributions to technical analysis are substantial, with his work predominantly occurring in the early 20th century. The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView.

How to Use the Gann Fan for Market Predictions

Backtests help to identify how the strategy would have performed in the past with historical data to know if the strategy is profitable or not and also find out the potential drawbacks. You should also consider using multiple timeframes and indicators when using Gann fan to make trading decisions. It may be important to diversify across different strategies, such as trend-following or breakout strategies. We provide two examples of Gann fan technical analysis using the charts of corn and wheat prices.

Gann Fan Method: A Proven Trading Strategy

gann fan indicator

These levels can be used to set profit targets, place stop-loss orders, or assess the overall strength of a trend. The anchor point serves as the foundation for the fan lines and helps traders identify key levels of support and resistance. It should be noted that the Gann Fan is widely utilized in various financial markets such as forex, stocks, and commodities. It is employed by traders who adopt Gann’s theory that prices move in predictable patterns, which are supposedly easier to discern with the Fan’s geometric angles.

gann fan indicator

To correctly scale your Gann fan check out the ‘How to Use the Gann Fan Indicator’ section above. The lines below the 1/1 line (1/2, 1/3, 1/4, and 1/8) are considered progressively more bearish. Those above the 1/1 line (2/1, 3/1, 4/1, 8/1) progressively more bullish.

Traders should also note how the market rotates from angle to angle. This rule states that when the market breaks one angle, it will move toward the next one. However, because of the constant adjustments that usually take place, it’s unreliable for making long-term forecasts.

For example, if the price is above the 2×1 the market has shown itself to be much more bullish than if it is above the 1×1. Gann believed that when an uptrending price reverses and breaks under an ascending angle, the tendency of the price is to go to the next nearest angle below it. When a downtrending price reverses and breaks up through a descending angle, the tendency of the price is to go to the next nearest angle above it.

As we can see from the image below, graphically, the Fan of Gann consists of a series of lines that open “fan” (precisely) starting from a point (which we will see can be a low, a high or zero). In a little while, we will see that these lines from a technical point of view will become our support and resistance levels. They are also distributed according to a precise angle (the angles or “Fan of Gann”), and this too takes on great importance, as we are about to see. Despite advancements, the Gann Fan indicator has its detractors who highlight several limitations. There is a subjective element to drawing Gann angles, leaving room for interpretation that may lead to inconsistent results among traders.

We want to ride the new trend for as long as possible and with the help of the Gann fan indicator, we can pinpoint the ideal time to take profits. We take profit at the earliest symptom of market weakness which is a break below the 1/1 line that signals a possible start of a bearish move. One of the reasons why this is the best Gann fan strategy is because we use the Gann fan indicator to track every swing in the market.

Multiple confirming indicators pointing to impending support or resistance increase the odds of a profitable turn in price action. The offers traders an alternate approach to trendlines or channels when analysing charts. Instead of horizontal or slightly angled trendlines, the Gann Fan indicator projects more steeply angled future support and resistance zones.

I’m Ben, I graduated with a degree in Engineering and Science from the University of Adelaide, Australia. I’ve been actively trading the Futures and Forex markets since 2014. All nine diagonal lines of the Gann Fan are now placed on the chart. The strength (or weakness) of a price move, is gauged with respect to the areas of the fan that price is trading.

Most sophisticated trading platforms should incorporate these tools. On the Tradingview platform, you can locate the Trend Angle tool on the left-hand side panel (see Figure below). Gann believed that when price and time move in sync, that’s the ideal balance of the market. The biggest part of the Gann theory revolves around the fact that prices above the 1/1 line.

This exercise will step up your learning curve and you’ll become a Gann expert in no time. Once you’re done, you need to learn how to draw the Gann fan angles. In this step, use the Gann Fan indicator, which is located on the left-hand side panel (see Figure below). This statement may sound obscure, but we’ll go through some examples shortly. You’ll get a better understanding of how to use the Gann fan indicator, and more importantly how to draw Gann fan angles.

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