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Lines of Gann Fan are built at different angles from an important base or peak at the price chart. The trend line of 1х1 was considered by Gann the most important. If the price curve is located above this line, it is the indication of the bull market, if it is below this line it is that of the bear market. Gann thought that the ray of 1×1 is a powerful support line when the trend is ascending, and he considered the breaking this line as an important turn signal. Gann emphasized the following nine basic angles, the angle of 1×1 being the most important of all:
1х8 — 82.5 degree
1х4 — 75 degree
1х3 — 71.25 degree
1х2 — 63.75 degree
1х1 — 45 degree
2х1 — 26.25 degree
3х1 — 18.75 degree
4х1 — 15 degree
8х1 — 7.5 degree
The considered ratios of price and time increments to have corresponding angles of slope in degrees, X and Y axes must have the same scales. It means that a unit interval on X axis (i.e., hour, day, week, month) must correspond with the unit interval on Y axis. The simplest method of chart calibration consists in checking the angle of slope of the ray of 1х1: it must make 45 degrees.
Gann noted that each of the above-listed rays can serve as support or resistance depending on the price trend direction. For example, ray of 1×1 is usually the most important support line when the trend is ascending. If prices fall below 1х1 line, it means the trend turns. According to Gann, prices should then sink down to the next trend line (in this case, it is the ray of 2х1). In other words, if one of rays is broken, the price consolidation should be expected to occur near the next ray.
Simply to interpret Gann Fan Lines will act as Support/Resistance
