Gann Chart Analysis

What is a Gann Chart

Gann ChartGann analysis has been used by traders for decades. It is a popular, intricate method for analyzing the direction of a commodity or stock. The basic construction of Gann angles remains the same while some recent changes have become necessary to adjust a few key components in pricing levels and volatility. Gann angles measure pattern, price and time frame. One of the controversies of Gann theory is that the past, present and future all exist at the same time on a Gann angle. So, when analyzing the course of a particular market, a trader tries to understand where the market has been, where it is in relation to a former top or bottom and where it might be going in the future.

How to Use Gann Chart Analysis

W.D. Gann’s techniques can be drawn on a chart manually or applied through a computerized technical analysis package found on many computers. Gann angles are often compared to trend lines, but in reality, they are not the same thing. A Gann angle is a diagonal line which moves at a uniform rate of speed. A trend line is created by connecting bottoms to bottoms to form an uptrend, and tops to tops to form a downtrend. Once a trader constructs a correct Gann angle, he can usually forecast where the price of a commodity or stock will be on a particular date in the future. This helps the trader estimate the strength and direction of the trend. In comparison, trend lines can be more unreliable in making long-term forecasts. Gann angles can be used to forecast support, resistance, strength of direction and timing of tops and bottoms.

 

Technical Analysis Guide

RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that RJO Futures believes to be reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgement at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.

Distribution in some jurisdictions may be prohibited or restricted by law. Persons in possession of this communication indirectly should inform themselves about and observe any such prohibition or restrictions. To the extent that you have received this communication indirectly and solicitations are prohibited in your jurisdiction with registration, the market commentary in this communication should not be considered a solicitation.