Gann Angles Price Versus Time

Gann established a relationship between units of price and units of time.

He used several styles of charts, including the conventional "X-Y" axis chart that is used today. Price is plotted on the "Y" axis, and time is plotted on the "X" axis. Gann died in 1955. Not having a computer, he used 8x8 graph paper (eight squares to the inch) to chart prices. The 8x8 graph paper allowed him to "balance" units of price with units of time.

Units of PRICE are unique for each commodity. A one-inch price movement on a chart for Treasury Bonds may equal 64 points. However, for the S&P 500 Index, this same one-inch distance may equal 100 points. It is the number of points on the chart, not the actual chart distance, which defines a unit of price, for purposes of establishing Gann angles.

Units of TIME are standard for all commodities. One minute, one hour, one day, one week, or one month are the same for the Gold, Pork Bellies, S&P 500 Index, Treasury Bonds or Corn markets.

By graphing "Y" units of price, moving in "X" units of time, Gann originated his Gann Angles. Gann Angles are written in the algebraic expression of "PxT," where "P" equals units of price and "T" equals units of time.

Gann Angles define price movements, by relating units of price to units of time. Each Gann Angle represents a relationship between price and time. The relationship between MANY Gann Angles, drawn from significant tops and bottoms, intersecting with each other and trading days, can not only determine WHEN prices will react, but AT WHAT PRICE that reaction will occur - a harmonious blend of price versus time.

The basic ratio of Gann Angles is 1:1 - one unit of price equalling one unit of time. The resulting "lxl" Gann Angle reflects that prices are moving one unit of price in one unit of time. A "2x1" Gann Angle indicates that prices are moving TWO units of price in one unit of time. A "1x2" Gann Angle indicates that prices are moving one unit of price, but in TWO units of time.

Assuming prices are rising, prices following a 2x1 Gann Angle are rising faster than prices following a 1 xl Gann Angle. A1 x2 Gann Angle would indicate the slowest of all 3 rates of price rise. Prices falling at a 2x1 Gann Angle are falling at a faster rate than at a lxl or 1x2 Gann Angle.

Table 2 expands on Table 1, by listing 7 Gann levels, with their corresponding percentages, degrees and Gann Angles:

Gann Price Levels Percentages, Degrees, Gann Angles, Support/Resistance

Table 2

Level Percentage Degree Gann Angle Support/Resistance

Table 2

Level Percentage Degree Gann Angle Support/Resistance

1/8

12-1/2

14

1x4

Support +

2/8

25

26-1/2

1x2

Support +

4/8

50

45

lxl

Neutral

5/8

62-1/2

63-1/2

2x1

Resistance +

6/8

75

75

4x1

Resistance +

7/8

87-1/2

82-1/2

8x1

Resistance +

8/8

100

90

Resistance +

Assumes a Rising Market; Reverse for Falling Market

Unlike geometric angles, Gann Angles are NOT the same for all markets. A 45-degree GEOMETRIC angle is not equal to a lxl GANN Angle for all markets. A lxl GANN Angle is not at the same GEOMETRIC angle for ALL markets in ALL time frames. GANN's system was designed to reflect the unique nature of EACH market's price activity in relationship to time.

GEOMETRIC angles represent each of Gann's eighth-levels of price activity, independent of time. While some relationship may exist between movements of price units per unit of time by using geometric angles, the relationship is not constant for ALL commodities in ALL time periods, or for ALL chart scales.

Gann found prices will react in a unique way when following his Gann Angles, designated as "Support/Resistance" in Table 3. If prices begin to rise (a bull trend) from a significant low, they will follow a base angle of lxl, or 45-degrees, for most of the trend. As a change-in-trend starts to occur, the trend's angle for prices may increase to 63-1/2 degrees, 75 degrees, and 82-1/2 degrees (see Chart 54).

Should prices "break" the 45-degree line, they will find support along a 26-1/2 degree line. Should that line be broken, the last "line of defense" before prices collapse will be along a 14-degree line. Gann was so confident that a change in trend was about to evolve after prices closed under a 45-degree line that he termed it the "Death Line."

Charts 11 and 12 illustrate Gann Angles, and their resulting geometric angles, in relationship to chart scale.

Chart 11 illustrates the relationship between Gann and geometric angles when units of price EQUAL units of time.

Each unit of price, and each unit of time, equals 1 inch.

When prices move ONE unit of price in TWO units of time, a 1x2 GANN Angle, or a 26-1/2-degree GEOMETRIC angle, results.

When prices move ONE unit of price in ONE unit of time, a lxl GANN Angle, or a 45-degree GEOMETRIC angle, results.

When prices move TWO units of price in ONE unit of time, a 2x1 GANN Angle, or a 63-1/2-degree GEOMETRIC angle, results.

When prices move FOUR units of price in ONE unit of time, a 4x1 GANN Angle, or a 75-degree GEOMETRIC angle, results.

Gann and Geometric Angles

Angle

Gann

Geometric

(Price v. Time)

(in degrees)

A

1x2

26-1/2

B

lxl

45

C

2x1

63-1/2

D

4x1

75

Since each market has a unique price scale, or when either the price or time scale of one market changes, the resulting GEOMETRIC angle of the GANN Angle will change accordingly.

Chart 12 illustrates the relationship between Gann and geometric angles, when units of price DO NOT EQUAL units of time. Units of time equal 1 inch. However, units of PRICE now equal 1-1/4 inches.

When prices move ONE unit of price in TWO units of time, a 1x2 GANN Angle still results, but now at a 32-degree GEOMETRIC angle.

When prices move ONE unit of price in ONE unit of time, a 1 xl GANN Angle still results, but now at a 51-degree GEOMETRIC angle.

When prices move TWO units of price in ONE unit of time, a 2x1 GANN Angle still results, but now at a 68-degree GEOMETRIC angle.

When prices move FOUR units of price in ONE unit of time, a 4x1 GANN Angle still results, but now at a 79-degree GEOMETRIC angle.

Gann and Geometric Angles

Angle

Gann Geometric

1x2 lxl 2x1 4x1

32 51 68 79

Charts 13,14 and 15 are real-time examples of Gann and geometric angles.

All 3 charts are ofthe June 1989 S&P 500 Index contract. Computerized lxl and 1x2 Gann Angles, and a 45-degree geometric angle, have been drawn on all 3 charts. The three lines begin from 26380, the low of 8/22/88, a Primary Gann Pivot Point day.

Each chart has a different time period and/or price range.

Chart 13 is for the time period of 9/1/88 to 12/30/88. The price scale is from a low of 26220 to 30360. This is the range defaulted by the software.

The lxl Gann Line intersects the price trend on 9/1/88 (a Minor Gann Pivot Point day), at 26632.

The lxl Gann Line is at a geometric angle of 33 degrees.

The 1x2 Gann Line is at a geometric angle of 18 degrees.

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Chart 14 has the same time period as that of Chart 13. The price range has been changed. The new range is from a low of26240 to a high of29440. The result is that the PRICE SCALE of the chart has changed.

The lxl Gann Line still intersects the price range at the same point, 26632 on 9/1/88, as it did in Chart 13. The 45-degree GEOMETRIC angle is still the same as that of Chart 13.

It is clear that the Gann Angles of Chart 6 are not at the same GEOMETRIC angles as those geometric angles of Chart 13.

The lxl Gann Line is now at a geometric angle of 40 degrees.

The 1x2 Gann Line is now at a geometric angle of 22 degrees.

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In Chart 15, both the time period AND the price range have changed from those of Chart 13. This alters the chart SCALES for both PRICE AND TIME.

The time period is from 6/17/88 to 10/31/88.

The price scale is from a low of 26220 to a high of 29440.

The lxl line, as in Charts 13 and 14, intersects the price trend at the low of 26632 on 9/1/88. The GEOMETRIC 45-degree line is still the same as that of Charts 13 and 14.

However, the GEOMETRIC angles of the lxl and 1x2 lines have again changed.

The lxl Gann Line is now at a geometric angle of 32 degrees.

The 1x2 Gann Line is now at a geometric angle of 17 degrees.

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