Gann Angles

The Gann Angles are named after W. D. Gann, a 20th century market theorist. Gann described the use of the angles in the stock market in The Basis of My Forecasting Method, a 33-page course written in 1935. The legitimacy of Gann's techniques has been seriously questioned. Calculating a Gann angle is equivalent to finding the derivative of a particular line on a chart in a simple way.

Each geometrical angle (which is really a line extended into space) divides time and price into proportionate parts. The most important angle Gann called the 1x1 or the 45° angle, which he said represented one unit of price for one unit of time. If you draw a perfect square and then draw a diagonal line from one corner of the square to the other, you have illustrated the concept of the 1x1 angle, which moves up one point per day. Other important angles were the 2x1 (moving up two points per day), the 3x1, the 4x1, the 8x1, and the 16x1. When the angles are drawn in a group, they are often called a Gann fan. Angles may either be drawn ascending from price bottoms, as just described, or descending from price tops.

As with other forms of technical analysis of stock price movements, the Gann angle model contradicts the weakest form of the efficient market hypothesis which states that past price movements cannot be used to forecast future price movements.