Gann levels are indicators used for technical analysis of financial markets. It was created based on the work of William Delbert Gann (WD Gann), the legendary financial trader of the twentieth century. It is believed that he possessed outstanding – even supernatural – abilities to predict price movements and stock market events.
Contents:
- Gann levels in layman’s terms
- What Gann levels should traders use?
- Gann Line
- How to use the Gann Fan
- Gann Grid
- Does it get the sense to use Gann Levels?
Gann levels in layman’s terms
Trading Forex using Gann levels is not easy, especially if you are a beginner. In this article, we will try to explain it in plain English. Gann is considered a phenomenal trader. During his lifetime, it was argued that he would rely on scientific literature, numbers, and astrology for calculations.
There is evidence that Hann predicted the abdication of Kaiser Wilhelm II in November 1918. He is also credited with predicting the exact level of cotton prices in September 1927, the close of the stock exchange due to the 1931 panic when the market bottomed out.
What Gann levels should traders use!
Traders can utilize Gann Lines, Gann Fan, and Gann Grid, which draw the needed levels on the chart. Let’s explore each of them in turn.
Gann Line
Gann’s line is also called “one-to-one” (1×1). It signifies the level (line) of the trend. It is stretched on the chart between two points, which allows us to determine if the market is currently in an uptrend or downtrend.
This Gann Line indicator is drawn at a 45-degree angle, showing the change in price by a specific time. If the chart is higher this line, there is an uptrend in the market. Furthermore, if the price is lesser than the Gann line, a downtrend dominates the market. If the lines cross, then the direction of the key trend is changing.
How to use the Gann Fan?
The second Gann indicator is the Gann fan. These are oblique lines that are drawn from one point at different angles. The base (starting) point of the fan should be located at a strong high or low on the chart. It is noteworthy that the fan line, located at an angle of 45 degrees (ie, the one-to-one trend line), is the main level and direction of the trend.
As with the previous indicator, the location of the price below the trend line indicates a bearish direction in the market. If the price is above this level, it is considered a strong support line. If it is broken, then the market is reversed.
Traders need to view the Gann levels in this indicator as sloping support and resistance lines. The rule applies here: the price moves from one strong level to another.
Gann Grid
The Gann grid is another indicator. A Gann grid is a set of trend lines, each tilted at an angle of 45 degrees. If the price on the chart is above the upward Gann level in the grid, it means that there is an uptrend in the market, and the indicator ray itself serves as support. If the quotes are located under the descending ray of the Gann grid, this is a sign of a descending direction, and the line itself can be used as a resistance level.
Does it make sense to use Gann levels?
In addition to the three standard indicators discussed earlier that is Gann fan levels. As a rule, you can download the Gann indicator for free from web resources dedicated to traders.
That being said, it’s up to you whether to use these indicators to make money. When making your choice, be sure to consider the advantages and disadvantages of these tools.
Gann levels are excellent for:
- Receiving an additional market signal. They can be combined with either conventional technical levels or indicator trading strategies.
- Experienced traders who want to create a new strategy, improve an existing one, or use indicators developed by legendary trader Gann to gain an extensive understanding of market patterns.
