Today let’s look at my application of Gann Fans. A Gann Fan is nothing more than a slope of a significant range and multiples of that slope. For those of you who have been following my Range Square analysis, you will notice that this is not any different. Using fans only removes the time cycles from the Range Square. These cycles can be added but may make the chart too cluttered to use.
Lets look at a view of the bull market from 2002-2007 using Gann Fans. Here I have set the 1:1 Gann Angle at the slope of the entire move. I then add a fan using double and half angles. You can see the market behaved in an orderly fashion (much like a bouncing ball). Even thought the news was anything but orderly, and there were periods everyone thought it was all going to fall apart, the market moved according to it’s own equation. The market doesn’t watch Maria Bartiromo and CNBC.
Notice how the impulse move off the Oct02 low moved up to the 8:1 angle. This is a normal impulse slope to start a move. The subsequent retrace was not impulsive and moved one-half of the amplitude of the impulse move to the 1:4 angle. Next the market bounced one-half the amplitude again to the 2:1 angle. Eventually the market found equilibrium in Oct07 and started down.
Using that same slope, (the inverse on the way down), we see that price had an impulse move down to the 8:1 angle. It is interesting that price ended the “a” leg of this a-b-c bear market correction at exactly 1/8 of the time of the bull market move. I did place the time range on this chart to show that price changed direction at the 1/8 time angle - even though it did not turn on the fan angle.
A guess: Price could bounce as high as the 1:4 descending angle which is just above 1500. There is no rule that it must move 1/2 of the previous amplitude, but that is a good rule of thumb to watch. I expect at least a move to 1450 which is near the 1:1 decending angle. Of course, I could be completely wrong…
Post Modified: July 2nd, 2008 at 11:56 pm
Tags: Elliott Wave Analysis · Gann Angle Fan · How To · Price-Time Balance · SlopeNo Comments
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