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Gann Angles - this is one of the most abused subjects in all of Gann and a
subject to which I must contribute a personal "two cents". It is hoped
that these comments will be read only in the most-positive manner in which
they are written.
Gann had a legion of analysis techniques. Many are subjective and
interpretive. The Gann student may spend some time before becoming
confident in projecting effective turning dates with Gann angles.
A very-basic theory of Gann angles is that turning points in price and/or
time are determined by the intersections of Gann angles. Support and
Resistance is determined by the specific angle.
True, "breaking a 45..." on a closing basis may suggest an upcoming change
in trend. But to equate a Gann-angle 1x1 to a geometric 45-degree may be
incorrect in all markets except for Gold (Gold uses a 1-to-1 rise-to-run
ratio). The mathematical reasoning for this is simple.
By their very definition, Gann angles are based on price (the "y" axis) and
time (the "x" axis"). Simply stated, Gann angles result and are affected by
a co-ordinates of the "y" axis AND the "x" axis.
Geometric angles are separately affected by changes in the "x" and "y" axis.
Gann angles are not.
Therefore, with respect to the point at which the angle will intersect the
trend, a Geometric angle (not "angel" - that's the thing with wings) will
change when price or time, or BOTH, are changed. A Gann angle will not
change.
Don't believe me? Try this (assuming you have TradeStation):
1) GENERATE ANY CHART - commodity or time frame doesn't matter (don't use
Gold because, as was previously mentioned a "1x1" is at a 45-degree angle).
2) SET YOU PRICE SCALING TO LINEAR - Gann angles won't work with semi-log
scaling.
3) ENTER A 45-DEGREE SEGMENT LINE AND A 1X1 GANN LINE - Note at what
prices both angles intersect prices. Again, the commodity and x-axis time
won't matter.
4) CHANGE EITHER THE "X" AXIS OR "Y" AXIS - it will be seen that the
Geometric angle intersects the price trend at a different point. The Gann
angle however, based on time AND price, will interest the price trend at the
same point.
Since the point at which either the Gann angle or the Geometric angle
intersects the price line (trend) is critical to correct trend analysis, it
is clear that Gann angles offer greater accuracy than Geometric angles.
And now (since I probably opened the flood gates) on to others "two
cents..."
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