DEFINITION of 'Gann Fans'

A form of technical analysis based on the ideas that the market is geometric and cyclical in nature. A Gann fan consists of a series of diagonal lines called Gann angles, of which there are nine. These angles are superimposed over a price chart to show a security's support and resistance levels. The resulting image is supposed to help technical analysts predict price changes. Although once drawn by hand, today Gann fans can be drawn with software programs.

BREAKING DOWN 'Gann Fans'

Gann Fans were developed by W. D. Gann, who was also known for his accurate financial predictions, called the Gann studies, in the early 1900s. Gann's ideal angle was a 45 degree angle based on his ideal balance of time and price. However, because the construction of a Gann fan relies heavily on subjective choices made by individual traders, the chart may be limited in its usefulness and accuracy. The three premises Gann based his theory on were: i) price, time and range are the only factors, ii) cyclical markets, and iii) geometric market design.

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RELATED FAQS
  1. Why is the Gann Fans important for traders and analysts?

    Learn more about the theories of W.D. Ganns, and see how traders employ his nine Gann fans to identify support and resistance ... Read Answer >>
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    Read more about the Gann fans trading system and how the assumptions inherent in its model are best complemented by momentum ... Read Answer >>
  3. How do I use Gann Fans for creating a forex trading strategy?

    Read about how forex traders can use the trendlines drawn in a Gann fans model for either trend following or trend reversal ... Read Answer >>
  4. What is the Gann Fans formula and how is it calculated?

    Learn about Gann fan theory, a style of market analysis that assumes that prices move in predictable, geometrical cycles ... Read Answer >>
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    Learn about applications of the geometric mean based on examples such as calculations of portfolio return, growth rates and ... Read Answer >>
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