Gann Theory
Gann Theory is a market analysis approach developed by W.D. Gann that uses geometric angles, price-time relationships, and natural cycle lengths to forecast future price movements and identify significant support and resistance levels.
William Delbert Gann was a trader and analyst active in the early twentieth century who claimed to have discovered immutable laws governing price and time in financial markets. His methods blended mathematics, geometry, astronomy, and ancient numerological principles into a system that, while controversial in its theoretical foundations, produced a set of practical tools that remain in use.
The Gann Angle is the most widely applied concept. Gann argued that price and time maintain specific geometric relationships, the most important being the 1x1 angle, which represents one unit of price rising per one unit of time. On a correctly scaled chart, this produces a 45-degree line from a significant low or high. Price above the 1x1 angle is considered bullish; price below it is bearish. Other key angles include 2x1 (two price units per time unit) and 1x2 (one price unit per two time units), representing steeper and shallower trajectories respectively.
Gann Square of Nine is a spiral number grid used to calculate potential price support and resistance levels and time-based turning points. Starting from 1 at the centre and spiralling outward, numbers that fall on the cardinal cross (0, 90, 180, 270, 360 degrees) and the diagonal cross (45, 135, 225, 315 degrees) occupy privileged positions. Analysts 'square' a significant price by locating it on the grid and then reading the levels that sit 90, 180, or 360 degrees away as potential targets or reversal zones.
Time cycles are another pillar of Gann's work. He identified cycles of 90, 144, and 360 calendar days as particularly significant. When a major high or low was formed, he would count forward by these intervals to anticipate future turning points. The Master Time Factor combined with the Square of Nine was Gann's most complex synthesis of price and time.
In India, Gann-based analysis is a niche but active community, particularly among commodity and currency traders. The Square of Nine is applied to Nifty 50 and crude oil futures to project potential turning points. Critics note that Gann's methods require subjective scaling choices and offer enough degrees of freedom that confirmations can nearly always be found in hindsight. Practitioners counter that discipline in applying standard scaling — particularly the ratio of one Nifty point per one trading day on the Square — produces consistent results.