A Handbook of Technical Analysis: The Practitioner's Comprehensive Guide to Technical Analysis

CHAPTER 19

Basics of Gann Analysis

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

• Understand the meaning of price-time balance in the markets
• Describe how one-eighth, one-third, and 50-percent retracements charts forecast potential support and resistance in the markets
• Identify and differentiate between the square of nine price and time projections
• Understand how to calculate the scale or trend rate for any commodity or market
• Construct various charts using Gann Fans and Grids using the appropriate scale or trend rate
• Set up Gann charts with various oscillators to identify overbought, oversold, and divergence with respect to price

Gann techniques for forecasting potential reaction levels in the markets have fascinated practitioners for decades, especially with his use of market geometry, symmetry, and corresponding number systems. Many of Gann's approaches are fairly esoteric, and practitioners have spent decades trying to decipher Gann's rather cryptic documentation of his techniques in his few books, personal charts, and training notes. Due to the complexity of Gann analysis, the best that can be presented here is but a brief description of some of his more popular techniques for forecasting potential areas of support and resistance, as well as potential tops and bottoms in the market, with some modern variations. We shall cover Gann angles and fans, Gann grids, Square of Nine price and time projections, as well as Gann percentage retracements. ...