How to Use Gann Trading for Enhancing your Analytical Skills

Active traders have been using Gann trading for decades. Despite the futures and stock markets changing considerably, they have become a popular mode of analyzing the direction of the asset. The latest trading areas, inclusive of the foreign exchange market and the invention of exchange-traded funds have made it essential to revisit the construction rules and application concepts. Despite the basic construction of Gann angles remains the same, let us delve into the changes in price levels and volatility. It has made it essential for adjusting a few major aspects.

Basic elements of Gann theory

Gann angles have been a relatively popular analysis and trading tool used for measuring major aspects, inclusive of price, pattern, and time. It would not be wrong to suggest that the past, present, and future would exist simultaneously on a Gann angle. When trading or analyzing the course of a specific market, the trader or analyst would have an idea of where the market would be, where it has been concerning that former top or bottom, and how you should use the information for forecasting future price action.

Gann angles providing resistance and support

Gann angle would be used for forecasting resistance and support. After the analyst determines the duration he or she is going to trade and properly scales the chart, the trader would draw the three main Gann angles, namely 1X2, 1X1, and 2X1 from the main tops and bottoms. It would be pertinent to mention here that the technique frames the market enabling the analyst to go through the movement of the market inside the framework.

The up-trending angles would provide the support and down trending angles would provide the resistance. Due to the analyst knowing where the angle is on the chart, he or she would determine whether to purchase on support or sell at the resistance.

Traders should be aware of how the market rotates from one angle to another. It is popular as the rule of all angles. The rule states that when the market breaks one angle, it would move toward the other one.

Yet another way to determine resistance and support would be by combining the angles and horizontal lines. For instance, often a down-trending Gann angle would cross a 50% retracement level. The combination would set up a key resistance point. It would be pertinent to mention here that up-trending angles would cross a 50% level. Rest assured that the area becomes a major support point. If you have a long-term chart, at times, you would see several angles cluttered near or at the same place. These have been deemed as price clusters. With more angles clustering in the zone, more importance is given to support and resistance.

Gann angles could be a valuable tool for the trader or the analyst, provided they use it properly. With an open mind and grasping the major concept that the past, present, and the future exists simultaneously on a Gann angle, it could help you trade and analyze a market with more accuracy. Learning the characteristics of the different markets concerning volatility, moving of the markets, and price scale within the Gann angle framework would enhance your analytical skills.

I3T3 offers Algo Trading, Harmonics Trading, Elliot Wave Theory, WD Gann Trading, Stock Market Webinars, Share Market Classes, Stock Market Courses Online, Technical Analysis Training in Delhi, Bangalore, India.

Looking for Stock Market Training for Beginners? Traders Gurukul offers Best Share Market Classes, Stock Market, Online Trading & Technical Analysis Courses.