**An Alternative Slant on Market Timing.**

W D Gann was a prolific writer and trader, and created a fortune of over 50 million dollars (equivalent to 500 million today!).

Many of his trading predictions were the subject of public record.

For instance, he correctly predicted the 1929 crash a year in advance! Gann died in 1955, but he still holds legendary status as a technical innovator.

By predicting the market using Gann angles, you can add a valuable tool to your trading strategy.

Assumption: By Studying the Past, We Can Predict the Future

Gann based predictions of price movements on three premises:

1. Price, time, and range are the only three factors to consider.

2. The markets are cyclical in nature.

3. The markets are geometric in their design and in function.

Gann believed that human nature was constant, and this showed up in repetitive price patterns that are identifiable, and which can therefore be acted upon to increase profit potential.

**Gann's Strategy for Trading Success**

Based on the above assumptions, Gann's strategies revolved around three areas of prediction:

1. Price study- This study uses support and resistance lines, pivot points and angles.

2. Time study - This studies historically reoccurring dates derived from natural order

3. Pattern study - These study market swings using trend lines and reversal patterns.

**Constructing Gann Angles**

Predicting the market using Gann angles requires subjective judgment and practice.

Here is what you need to do:

1. Determine the time units - One common way to determine a time unit is to study the chart and look at the distances in which price movements occur. Then, put the angles to the test and see how accurate they are. The intermediate-term time frame (one to three-month) tends to produce the optimal amount of patterns compared to short term daily, or multi year charts.

2. Determine the high or low from which to draw the Gann lines - The most common way to accomplish this is to complement it with other forms of technical analysis i.e. Fibonacci levels or pivot points. Gann used what he called "vibrations" or "price swings." He determined these by analyzing charts using theories such as Fibonacci numbers.

3. Decide which pattern to use - The two most common patterns are the 1x1, the 1x2, and the 2x1. These are simply variations of the slope of the line. For example, the 1x2 is half the slope of the 1x1. The numbers simply indicate the number of units.

4. Look for patterns - The direction would be either downward and to the right from a high point or upward and to the right from a low point.

5. Look for repeat patterns on the chart - The basis of this technique is the premise that markets are cyclical.

**Using Gann Angles for Trading Profits**

The most common use for Gann angles when predicting the market is to indicate support and resistance levels. Many other trading methods use support and resistance lines, so what sets Gann's method apart from the rest?

Quite simply, predicting the market using Gann, angles add a new dimension to support and resistance levels, in that they can be diagonal.

**The Optimum Gann Formation**

The optimum balance between time and price exists when prices move identically to time. This is present when the Gann angle is at 45 degrees.

In total, there are nine different Gann angles. When one of these trend lines is broken, the following angle will provide the next level of support or resistance.

http://www.gann.co.uk

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