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Gann Angle: A geometrical angle (which is really a line extended into space) that divides time and price into proportionate parts.
The most important Gann Angle is the 1×1 or the 45° angle, which represents 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 1×1 angle, which moves up one point per day.
Other important angles were the 2×1 (moving up two points per day), the 3×1, the 4×1, the 8×1, and the 16×1. 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.
Gann Format Chart: The main charts to be used for technical analysis should contain the following data: the open, the high, the low, and the close. The charts can be simple bar or Gann-style that feature a vertical line for the range with a hook to the left on the high, a hook to the left on the low, a dot to the left of the range for the opening, and a dash to the left of the range for the close. Both charts contain the same data, but since much of charting is perception, some chartists may prefer one look over the other.
Gann Theory: Gann Theory is based on the principle that price and time must balance. Markets are constantly in a position of change and subject to movement, sometimes with great volatility.
Gann Theory states that there is order to this movement. By using the proper tools to analyze this movement, an accurate forecast for future direction can be made.
Finding the balancing points is necessary to predict future prices and movement. Gann developed a number of methods to help determine these balance points. The first method uses patterns created by swing charts to find the balance points. The second method uses angles and the squaring of price and time to find the balance points. The third method uses time.
While the perfect market remains balanced all the time, it also proves to be uninteresting, because major moves occur when price is ahead of time or time is ahead of price. The proper use of the various Gann analysis tools will help you to determine when these major moves are most likely to occur.
