Lines of Gann Fan are built at different angles from an
important base or peak at the price chart. The trend line of
1õ1 was considered by Gann the most important. If the price
curve is located above this line, it is the indication of the
bull market, if it is below this line it is that of the bear
market. Gann thought that the ray of 1x1 is a powerful support
line when the trend is ascending, and he considered the breaking
this line as an important turn signal. Gann emphasized the following
nine basic angles, the angle of 1x1 being the most important of all:
1õ8 — 82.5 degree
1õ4 — 75 degree
1õ3 — 71.25 degree
1õ2 — 63.75 degree
1õ1 — 45 degree
2õ1 — 26.25 degree
3õ1 — 18.75 degree
4õ1 — 15 degree
8õ1 — 7.5 degree
The considered ratios of price and time increments to have
corresponding angles of slope in degrees, X and Y axes must have
the same scales. It means that a unit interval on X axis
(i.e., hour, day, week, month) must correspond with the unit
interval on Y axis. The simplest method of chart calibration
consists in checking the angle of slope of the ray of 1õ1: it
must make 45 degrees.
Gann noted that each of the above-listed rays can serve as
support or resistance depending on the price
trend direction. For example, ray of 1x1 is
usually the most important support line when the trend is
ascending. If prices fall below 1õ1 line, it means the trend
turns. According to Gann, prices should then sink down to the
next trend line (in this case, it is the ray of 2õ1). In other
words, if one of rays is broken, the price consolidation should be
expected to occur near the next ray.
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