How to Use the Gann Fan in Systematic Trading
The Gann Fan is a technical analysis tool developed by W.D. Gann, a legendary and 20th-century market theorist who believed that movements in price follow geometric angles. The fan consists of multiple angled lines drawn from a key price high or low, helping traders visualize trend reversals, support and resistance levels, trend direction, and potential price targets.
Unlike traditional trend lines, which are based on past price action, Gann Fans are constructed using predefined angles that represent different price-to-time relationships. The most critical angle is the 1×1 angle, which forms a 45-degree trend. Price movement above this angle suggests a strong bull market, while movement below it signals a bearish market.
For systematic traders, the Gann Fan provides an objective method to identify trends, making it useful for designing fan trading strategies and resistance trading strategies that reduce emotional decision-making.
