The Gann Angles tool draws lines showing the relationship between time and price, using the principles taught by Gann. The 1 x 1 line represents equal amounts of time and price. (The line progresses horizontally by unit of time and vertically by unit of price. The unit of price is user-specified.).

In the chart example below, the unit of time is 1 day (a Daily chart is displayed). The unit of price for the 1 x 1 line is 10 cents. Selecting a different unit of price will adjust where the 1 x 1 line is drawn.

You can use the Measurement Tool to verify the 1 x 1 line. The number of bars multiplied by the unit of price will equal the measured value.

Detailed instructions on how to use the Gann Angles tool can be found in your Bourse Software Help.

• Drawing Gann Angles Charts

  Interpretation

  The Gann Angles tool draws Gann support and resistance lines on the chart to make up a Gann Fan. The lines of a Gann Fan are used to determine price breakouts and the strength of those breakouts. You can apply up to nine Gann Lines in each Gann Fan.

  A Gann Fan cannot be drawn on a chart scaled to semi-log. This is because a Gann Fan requires that a unit move is always displayed with the same amount of screen space on your chart, regardless of what price level is being examined. With a semi log chart, this assumption is not true.

  Above all else, the heart of Gann analysis rests with the angles. Mr Gann, who developed the Gann Fan, took a square and divided it into 28 equal squares vertically and horizontally. He then drew a 45-degree angle through the middle of it. He called this angle the "one-by-one" (I x l). This means that for every one movement in time there is one movement in price.

  One of the easiest methods of detecting a bull market is determining whether prices hold above the 45-degree line. According to Gann theory, when the line is violated, the bull market is ending.

  Although the one-by-one is the most important angle, there are the one-by-two (1x2), one-by-four (1 x4), one-by-eight (1 x8), and one-by-sixteen (1 x 16) angles as well. Gann's rule for using angles was this: if one angle is broken, the market will trade down (up) to the next-lowest (highest) angle. A one-by-two angle is steeper than a one-by-one angle. Thus, if prices rise at a one-by-two angle the market is considered extremely bullish. All angles should be drawn from any significant high or low points in the market.

  As markets turn from bull to bear, however, the one-by-one will no longer hold and, in time, the pace might accelerate still more. At that time, the two-by-one line might be the line the market is following. If one line cannot hold, look for the market to trade to the next line.

  The angles are valuable not only as support and resistance lines, but as indicators of important reversal points as well. The reversal points occur where the angles cross. For example, if the market made a significant low at 280.00, went up to 289.80, then came down to 280.00 once again. If at both occurrences of 280.00 one-by-one and one-by-two lines were drawn up from them, the one-by-one from the first point will at some point cross the one-by-two from the second point and vice versa. These points are critical points and many times indicate a powerful reversal.