how gann fans work
angled lines are drawn above and below a central 45 degree line to help determine trend direction and strength gann fans are drawn from a central 45 degree angle line that extends out from a specified trend reversal level traders will draw a gann fan at a reversal point to see support and resistance levels extended into the future the 45 degree line is known as the 1 1 line because the price will rise or fall at a 45 degree angle when the price moves up down one unit for each unit of time all other lines in the gann fan are drawn above and below the 1 1 line traders can use a varying number of lines above and below the 1 1 line in a gann fan chart the other angles are associated with 2 1 3 1 4 1 8 1 and 1 8 1 4 1 3 and 1 2 time to price moves the 45 degree angle line of the gann fan should be aligned with a 45 degree angle on the chart to find the 45 degree angle use the degree angle tool on your charting platform the 1 1 line is the primary indicator however chartists have choices for adding additional lines at their discretion in both an uptrend and a downtrend the 1 1 line can help to detect a reversal in a downtrend a price that stays below the 1 1 line is considered bearish in an uptrend a price that stays above the 1 1 line is considered bullish thus the 1 1 line can serve as a resistance and support line additional lines drawn in a gann fan diagram are also used as resistance and support lines gann believed that if the price moved through one angle it would likely head to the next angle for example if the price dropped below the 45 degree angle 1 1 it would drop to the 26 25 degree angle 2 1 a price that drops below 1 1 doesn t necessarily mean the overall uptrend is over the price may find support at 2 1 and then keep rising that said the fall below 1 1 could indicate at least short term weakness if the price drops to the 2 1 line gann fan vs trendlinesthe gann fan is a series of lines drawn at specific angles the 45 degree line should extend out 45 degrees from the starting point a hand drawn trendline connects a swing low to a swing low or a swing high to swing high and then extends out the right the trendline is matched to recent price action and is not drawn at a specific angle a gann angle is thus a diagonal line that moves at a uniform rate of speed a trendline is created by connecting bottoms to bottoms in the case of an uptrend and tops to tops in the case of a downtrend the benefit of drawing a gann angle compared to a trendline is that it moves at a uniform rate of speed this allows the analyst to forecast where the price is going to be on a particular date in the future this is not to say that a gann angle always predicts where the market will be rather the analyst will know where the gann angle will be which will help gauge the strength and direction of the trend a trendline on the other hand does have some predictive value however because of the constant adjustments that usually take place it s unreliable for making long term forecasts limitations of using the gann fanwhile some charting platforms may provide the gann fan they may not provide an angle tool in order to set the 45 degree line at a true 45 degree angle for that chart since different assets have different prices they may not be scaled at 1 1 1 for one day for example they could be scaled quite differently upon placing the gann fan on multiple charts it is evident that the gann fan isn t always useful the price may stay between the levels but not reach them or the price may continue to rise even though it is below the 1 1 line for example the lines may not mark important support or resistance areas and the price may seemingly disregard the fan levels the lines continually spread out over time making the distance between the lines extremely large the distance between the lines may become so large that the indicator does not function for trading purposes since the price would need to move a considerable distance before reaching the next level trading signal gann fans should be used in conjunction with other technical indicators price action and other forms of analysis 