Gann angles, originally known as Geometric Angles, are some of the major tools used by W.D. Gann to profit from the market. These angles can be used to find support and resistance levels, to analyze the strength and direction of trends and to predict price reversals. Gann angles are drawn from high or low points of a trend and are representations of time to price relationships.
There are 9 major Gann angles of various degrees, which represent fixed rates of speed of trends. These angles are figured out as units of Time x Price (T x P), pronounced as Time By Price. The 9 angles are
1.1 x 8 = 82.5 degrees
2.1 x 4 = 75 degrees
3.1 x 3 = 71.25 degrees
4.1 x 2 = 63.75 degrees
5.1 x 1 = 45 degrees
6.2 x 1 = 26.25 degrees
7.3 x 1 = 18.75 degrees
8.4 x 1 = 15 degrees
9.8 x 1 = 7.5 degrees
High degrees of angles represent swift trends and low degrees represent small trends. Usually these trends are less reliable and less durable.
During strong up-trends the price stays above a significant angle (1x2, 1x1 or 2x1). Similarly during a downtrend price stays below a significant angle.
If one angle is penetrated (price reversal) the price tends to fall to the next less steep angle (e.g.: from 1x1 to 2x1).
1x1 is the single most important angle, which gives a 45 degree angle, showing a perfectly balanced trend (up or down). Whenever the price broke this angle a significant trend change is indicated.
When Gann angles crosses a significant pivot point or other past angle then there is a higher change of trend changes.