Gann square trading has always been the best method to do technical analysis in the forex market. A lot has been changed in the past two decades, but the Gann tool is still being used by a lot of traders to forecast the market. It does not matter either or the stock market or the foreign exchange market.
Although methods of applying Gann angles on the chart are still old but to use these methods with a confluence to increase the winning probability will be discussed in this article.
A theory proposed by WD Gann in which technical analysis is based on the geometry of the price and fan angles is called Gann theory. He uses both time and price to make this tool. This theory is also based on natural patterns and mathematical formulas. Gann square is a natural square calculator.
To do technical analysis in a currency pair, every trader first tries to know its history means the past, and then tries to know the present. For example, either the price is at a strong zone like support or resistance. This is present. Then trader tries to predict the future of the price. The main point here is that the present, past, and future can be identified easily by using Gann angles.
Basically, the Gann angles are the key concepts in this theory.
What are Gann Fan Angles?
Gann angles predict the diagonal support and resistance levels in technical analysis. Because lines are drawn at some angles that is why it represents diagonal support and resistance.
Gann fan angles use two dimensions
There are three main angles 1X2, 1X1, and 2X1 that can be used to have an overview of the market with the Gann box indicator.
Upward angles identify support levels and downward angles predict resistance levels. The best thing about Gann fan angles, you can predict the upcoming support or resistance level with respect to time. for example, you can predict using Gann angles that after 3 days, a strong support level will come in the EURUSD currency pair.
Both time and price are relative in this tool, and you can predict price with respect to time and time with respect to price. For example, if the price is respecting a trendline with a 45-degree angle then after its breakout it will move on to the next angle like an angle of 35 degrees. Then it will start respecting this angle. This is how Gann fan angles work.
If the price is respecting one Gann angle, then after the breakout of this angle it will start respecting the next one. Angle number represents the strength of a trend.
- Higher angle means strong trend
- Lower angle means weak trend
How to draw Gann fan angles in forex?
Use a Gann fan indicator is very simple. For example, if the price takes more time to rise then the slope of the price will be less steep and it represents a weak trend (by taking origin as a reference point). 1:1 in Gann means that Gann angle is 45 degrees. Above 45 degrees means a stronger trend and below 45 degrees means a weak trend.
To draw a Gann fan, drag the Gann fan tool from swing low to swing high and vice versa. Use Gann fan tool in tradingview. Other important ratios in Gann fan are 1:1, 1:2, 1:4, 1:8, 2:1, 3:1, 4:1 and 8:1.
Look at the image below. price is respecting Gann fan angles.
What is Gann Box, Gann Box Square, and Gann Box Square Fixed?
Gann box is used to find out repetitive cycles of price with equal intervals of time. Draw Gann box from swing high to low or swing low to the high point. Modify the Gann box easily without square restriction. But on the other hand, Gann box square has a 1:1 relationship between time and price.
Always remember to keep your layout square means slope between price height and time must be 45 degrees.
Gann box square fixed is used to fix this tool on the chart layout and it will not shift its layout.
Gann Angles vs Trend Lines
Trend lines are basically drawn by connecting the swing low or swing high points in a trending market whereas Gann fan angles progress with the uniform speed with respect to time. That is why a trader can forecast easily an upcoming date using Gann angles.
The similarity between trend line and Gann angles is that both work as a diagonal support and resistance level and after breakout price changes trend.
If both trend line and fan angle are intersecting at some point, then that point can act as a strong support and resistance level in the future but before the breakout of the trend line. After trend line breakout it will not remain valid.
What is Gann 50 Retracement Rule?
According to the Gann rule, if a currency pair or stock moves 100% in a direction in a specific time interval then for the next time interval it will come back or retrace 50% of the previous move. Like after movement of GOLD from $1100 to $1200 within two days then it will retrace to $1150 within the next two days.
Gann fan Trading Strategy
Using a Fibonacci as a confluence with Gann fan angles will help us find out strong angles. For example, draw Gann’s angle from swing low to swing high. Use all the possible fan angles. Now Draw Fibonacci from swing low to swing high point and highlight the 61.8% level.
if one of the Gann angles below 1:1 is coinciding with the Fibonacci 61.8% then it will act as a strong support zone or level. We will prefer to buy from this zone after bullish candlestick confirmation. This is the simple strategy to draw the strongest and trade-able zones while using Gann and Fibonacci tools.
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Note: All the viewpoints here are according to the rules of technical analysis and for educational purposes only. we are not responsible for any type of loss in forex trading.