Markets.com Logo
euEnglish
LoginSign Up

Using Gann Fan For Range Projections

Mar 20, 2024
6 min read
Table of Contents
  • 1. Gann Fans Simplified
  • 2. To construct a basic Gann Fan:
  • 3. Gann Fans can also be drawn in different orientations:
  • 4. Interpreting Projected Ranges
  • 5. Integrating with Oscillators
  • 6. Advancing with Arc Bands
  • 7. Closing Thoughts

Neon style digital screen displaying stock market data with fingertips touching it

 

Developed by legendary trader W.D. Gann, the Gann Fan remains a potent yet versatile tool for technical analysts seeking an “edge.” 

This guide explores how to construct and apply this angle-based technique to map potential trading ranges visually.

 

Gann Fans Simplified

Gann Fans is a technical analysis tool that identifies potential support and resistance levels based on geometric angle relationships. They are derived from the work of William Delbert Gann, a famous trader from the early 20th century.

To construct a basic Gann Fan:

  1. Identify a significant pivot point on the chart, such as a major high or low. This will serve as the anchor or starting point for the fan lines.
  2. Select one or more angles, typically between 30 and 60 degrees. The choice of angles is subjective, but traders often look for angles that have previously provided support/resistance for that market.
  3. Draw the first trendline from the pivot point using the chosen angle. This forms the fan’s central trendline.
  4. Then, draw additional trendlines paralleling the central one above and below it at consistent angular increments (e.g., every 2.5 or 5 degrees) to create the full fan shape.
  5. The trendlines act as potential support and resistance areas as prices approach them. Upward fans identify resistance levels, while downward fans identify support levels.

Gann Fans can also be drawn in different orientations:

  • Upward fans anchor from a significant low and slope upwards to project resistance zones.
  • Downward fans land from a major high and slope downwards to project support zones.

Also, multiple fans using different angular degrees can be overlaid to form a matrix of intersecting trendlines. The areas where multiple fans intersect are critical potential support/resistance zones.

Take a look at this article: Trends in Trading Explained

 

 

Interpreting Projected Ranges

When an asset’s price approaches one of these trendline levels, it signifies an area of interest where the existing trend could encounter resistance and selling pressure, potentially pausing or reversing an upward advance. 

Conversely, during downtrends, these fan levels can act as support zones where buyers could step in to curb further declines.

The successful testing of a Gann Fan level, where price respects the projected trendline as support or resistance, reinforces the validity and significance of that particular fan’s geometric angles. 

However, suppose the price decisively penetrates multiple fan levels. In that case, it may signal that the fan has lost its predictive value, and a new fan should be drawn from a more recent pivot point to capture the current market dynamics better.

Fans constructed from highly significant swing points, such as all-time highs or lows, tend to carry more weight and remain active over longer periods than those drawn from less impactful pivot points. 

This is because swing highs and lows often represent levels where the market has experienced prolonged battles between buyers and sellers, imbuing those price points with greater technical significance.

Learn more by checking out this useful article: Pivot Points in Trading - Key Levels of Support and Resistance

 

Integrating with Oscillators

 

Computer monitor displaying financial instrument charts with diverse technical analysis indicators

 

Oscillators like the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) are designed to measure the momentum and strength of a security’s price movements, often helping to identify overbought and oversold conditions.

For instance, if the RSI indicates an overbought condition near a resistance level projected by a Gann Fan, this confluence could signal an opportune time to consider taking profits or initiating short positions. 

Conversely, suppose the MACD shows oversold readings near a fan-based support level. In that case, it may present a favourable opportunity to enter long positions or add to existing long exposure.

The integration of Gann Fans and oscillators is not limited to single-point signals; it can also be applied to identify potential reversal zones. 

When multiple Gann Fans converge to form a channel-like pattern, the area between these converging fans can serve as a range where oscillators may reverse from overbought or oversold extremes, further increasing the reliability of the trading signals.

Expand your knowledge with this write-up: Deciphering the Moving Average Convergence Divergence Indicator (MACD)

 

Advancing with Arc Bands

 

Trading graphs with oscillators displayed on a computer monitor for financial analysis
 

While traditional Gann Fans employ fixed angles derived from geometric principles, some technical analysts prefer the added flexibility of Arc Bands, also known as Dynamic Gann Fans or Squares. 

Unlike standard fans, which are static, Arc Bands dynamically adjust their angle based on the underlying volatility and expanding price swings of the security being analyzed.

The advantage of Arc Bands lies in their responsiveness to market conditions. During relatively low volatility and sideways price action periods, the bands tighten and converge, providing more precise support and resistance projections. 

Contrariwise, when volatility increases, and price swings widen, the bands expand outward to accurately capture the heightened market dynamics.

This dynamic volatility adjustment allows Arc Bands to remain highly reactive and relevant, ensuring that the projected levels accurately reflect the current market environment rather than relying on a fixed set of angles that may become less applicable over time.

You might also like to read: Schaff Trend Cycle Indicator Explained

 

Closing Thoughts

Gann Fans provides a powerful geometric-based technical analysis tool for identifying potential support and resistance levels. By projecting angled trendlines from significant pivot points, traders can visualize areas where prices may encounter selling or buying pressure. 

Simple Gann Fans offer valuable insights, yet more advanced techniques like integrating oscillators or using dynamic Arc Bands can further enhance the analysis. 

Traders are encouraged to learn more about Gann Fans, explore historical examples, and continue to hone their skills in interpreting these unique chart patterns. 

With experience, Gann Fans can become a versatile addition to any trader’s analytical arsenal for mapping potential trading ranges.

Become a member of markets.com and access a cutting-edge trading platform!

“When considering “CFDs” for trading and price predictions, remember that trading CFDs involves a significant risk and could result in capital loss. Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be considered investment advice.” 


Risk Warning and Disclaimer: This article represents only the author’s views and is for reference only. It does not constitute investment advice or financial guidance, nor does it represent the stance of the Markets.com platform. Trading Contracts for Difference (CFDs) involves high leverage and significant risks. Before making any trading decisions, we recommend consulting a professional financial advisor to assess your financial situation and risk tolerance. Any trading decisions based on this article are at your own risk.

Arianne Bonacua
Written by
Arianne Bonacua
SHARE

Markets

  • Palladium - Cash

    chartpng

    --

    4.46%
  • EUR/USD

    chartpng

    --

    -0.12%
  • Cotton

    chartpng

    --

    -0.50%
  • AUD/USD

    chartpng

    --

    -0.25%
  • Santander

    chartpng

    --

    -1.87%
  • Apple.svg

    Apple

    chartpng

    --

    -0.52%
  • easyJet

    chartpng

    --

    -1.03%
  • VIXX

    chartpng

    --

    3.06%
  • Silver

    chartpng

    --

    3.53%
Tags DirectoryView all
Table of Contents
  • 1. Gann Fans Simplified
  • 2. To construct a basic Gann Fan:
  • 3. Gann Fans can also be drawn in different orientations:
  • 4. Interpreting Projected Ranges
  • 5. Integrating with Oscillators
  • 6. Advancing with Arc Bands
  • 7. Closing Thoughts

Related Articles

MicroStrategy (MSTR) Stock Forecast: What is the price target for MSTR 2025?

MicroStrategy (MSTR) Stock Forecast: MicroStrategy Inc. (MSTR), a prominent business intelligence company, has gained considerable attention in recent years, primarily due to its aggressive investment strategy in Bitcoin.

Ghko B|3 days ago

CrowdStrike Stock Prediction: What Is the Price Target for CRWD in 2025?

CrowdStrike Stock Price Prediction: CrowdStrike Holdings, Inc. (CRWD) has become a significant player in the cybersecurity sector, known for its innovative approach to threat detection and response.

Ghko B|3 days ago

Delta Stock Soars 12%: How to Trade Delta Stock CFDs?

Delta Stock Soars 12%: Delta Air Lines (DAL) has recently experienced a significant surge in its stock price, climbing by 12% in a single day.

Ghko B|3 days ago
Markets.com Logo
google playapp storeweb tradertradingView

Contact Us

support@markets.com+12845680155

Markets

  • Forex
  • Shares
  • Commodities
  • Indices
  • Crypto
  • ETFs
  • Bonds

Trading

  • Trading Tools
  • Platform
  • Web Platform
  • App
  • TradingView
  • MT4
  • MT5
  • CFD Trading
  • CFD Asset List
  • Trading Info
  • Trading Conditions
  • Trading Hours
  • Trading Calculators
  • Economic Calendar

Learn

  • News
  • Trading Basics
  • Glossary
  • Webinars
  • Traders' Clinic
  • Education Centre

About

  • Why markets.com
  • Global Offering
  • Our Group
  • Careers
  • FAQs
  • Legal Pack
  • Safety Online
  • Complaints
  • Contact Support
  • Help Centre
  • Sitemap
  • Cookie Disclosure
  • Regulation
  • Awards and Media

Promo

  • Gold Festival
  • Crypto Trading
  • marketsClub
  • Welcome Bonus
  • Loyal Bonus
  • Referral Bonus

Partnership

  • Affiliation
  • IB

Follow us on

  • Facebook
  • Instagram
  • Twitter
  • Youtube
  • Linkedin
  • Threads
  • Tiktok

Listed on

  • 2023 Best Trading Platform Middle East - International Business Magazine
  • 2023 Best Trading Conditions Broker - Forexing.com
  • 2023 Most Trusted Forex Broker - Forexing.com
  • 2023 Most Transparent Broker - AllForexBonus.com
  • 2024 Best Broker for Beginners, United Kingdom - Global Brands Magazine
  • 2024 Best MT4 & MT5 Trading Platform Europe - Brands Review Magazine
  • 2024 Top Research and Education Resources Asia - Global Business and Finance Magazine
  • 2024 Leading CFD Broker Africa - Brands Review Magazine
  • 2024 Best Broker For Beginners LATAM - Global Business and Finance Magazine
  • 2024 Best Mobile Trading App MENA - Brands Review Magazine
  • 2024 Best Outstanding Value Brokerage MENA - Global Business and Finance Magazine
  • 2024 Best Broker for Customer Service MENA - Global Business and Finance Magazine
LegalLegal PackCookie DisclosureSafety Online

Payment
Methods

mastercardvisanetellerskrillwire transferzotapay
The markets.com/za/ site is operated by Markets South Africa (Pty) Ltd which is a regulated by the FSCA under license no. 46860 and licensed to operate as an Over The Counter Derivatives Provider (ODP) in terms of the Financial Markets Act no.19 of 2012. Markets South Africa (Pty) Ltd is located at BOUNDARY PLACE 18 RIVONIA ROAD, ILLOVO SANDTON, JOHANNESBURG, GAUTENG, 2196, South Africa. 

High Risk Investment Warning: Trading Foreign Exchange (Forex) and Contracts For Difference (CFDs) is highly speculative, carries a high level of risk and is not appropriate for every investor. You may sustain a loss of some or all of your invested capital, therefore, you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with trading on margin. Please read the full  Risk Disclosure Statement which gives you a more detailed explanation of the risks involved.

For privacy and data protection related complaints please contact us at privacy@markets.com. Please read our PRIVACY POLICY STATEMENT for more information on handling of personal data.

Markets.com operates through the following subsidiaries:

Safecap Investments Limited, which is regulated by the Cyprus Securities and Exchange Commission (“CySEC”) under license no. 092/08. Safecap is incorporated in the Republic of Cyprus under company number ΗΕ186196.

Finalto International Limited is registered  in the Saint Vincent and The Grenadines (“SVG”) under the revised Laws of Saint Vincent and The Grenadines 2009, with registration number  27030 BC 2023.

Close
Close

set cookie

set cookie

We use cookies to do things like offer live chat support and show you content we think you’ll be interested in. If you’re happy with the use of cookies by markets.com, click accept.