Community Forex Questions
What are the Key Principles of Gann Theory in forex?
Gann Theory, developed by W.D. Gann, is a technical analysis approach used in forex trading to predict price movements based on geometric patterns, time cycles, and mathematical ratios. The key principles include:
Price and Time Balance – Gann believed that price and time must be in equilibrium. His "Square of Nine" and "Gann Fan" tools help identify support and resistance levels based on time and price angles (e.g., a 45-degree angle corresponds to one price unit per time unit).
Support and Resistance Levels – Gann emphasised the importance of historical price levels. Traders use Gann retracement levels (50%, 100%) to spot potential reversal zones.
Gann Angles – These are trendlines drawn at specific angles (1x1, 1x2, 2x1) to determine trend strength. A break of the 1x1 angle (45°) suggests a trend reversal.
Time Cycles – Gann identified recurring time cycles (daily, weekly, yearly) where trends may reverse. Traders use Gann’s "Master Time Factor" to forecast turning points.
Rule of Squares & Circles – Price movements follow geometric patterns, and key highs and lows often align with squared price ranges or circular degrees (e.g., 360°).
By applying these principles, forex traders aim to predict trend continuations and reversals with precision. However, Gann's methods require practice due to their subjective nature.
Price and Time Balance – Gann believed that price and time must be in equilibrium. His "Square of Nine" and "Gann Fan" tools help identify support and resistance levels based on time and price angles (e.g., a 45-degree angle corresponds to one price unit per time unit).
Support and Resistance Levels – Gann emphasised the importance of historical price levels. Traders use Gann retracement levels (50%, 100%) to spot potential reversal zones.
Gann Angles – These are trendlines drawn at specific angles (1x1, 1x2, 2x1) to determine trend strength. A break of the 1x1 angle (45°) suggests a trend reversal.
Time Cycles – Gann identified recurring time cycles (daily, weekly, yearly) where trends may reverse. Traders use Gann’s "Master Time Factor" to forecast turning points.
Rule of Squares & Circles – Price movements follow geometric patterns, and key highs and lows often align with squared price ranges or circular degrees (e.g., 360°).
By applying these principles, forex traders aim to predict trend continuations and reversals with precision. However, Gann's methods require practice due to their subjective nature.
Jun 24, 2025 02:04