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The widely followed trader WD Gann (1878-1955) believed that price movements depended on certain mystic angles, notably those based on a special relationship between time and price. He was widely believed to have predicted the great crash of 1929, although there appears to be no firm evidence to support this. To create Gann angles, time and price intervals on a chart must be equal, so a 1 unit movement in price and a 1 unit movement in time produce an angle of 45 degrees. This 45 degree angle was believed by Gann to be the 'perfect' angle for a stock price to rise - not too fast, and not too slow, and it is known as the '1x1' angle (one unit of price rise for each unit of time expired). Gann angles are usually drawn between a major bottom and top (or vice versa) and an angle will then reveal itself. If prices are above the 1x1 trendline, it signifies a bull market, and if below, a bear market. This seems to indicate that Gann felt the 1x1 trendline provided the most important support and resistance during trends, which if broken, meant the trend was reversing.

Gann identified a total of nine angles (the so-called 'square of nine'), with the 1x1 being the most important. They are:-

1x8 (82.5 degrees),
1x4 (75 degrees),
1x3 (71.25 degrees),
1x2 (63.75 degrees),
1x1 (45 degrees),
2x1 (26.25 degrees),
3x1 (18.75 degrees),
4x1 (15 degrees) and
8x1 (7.5 degrees).

There is often confusion about Gann's techniques, as his writing was rather convoluted, and the principle of making time units equal to price units is often overlooked. Each of the angles, according to Gann, offered some level of support and resistance. When a line was broken, the next line would be the next likeliest place to find support or resistance. For example, if the 1x1 line was broken downwards, signifying a reversal in the bull trend, the 2x1 angle would be the next line of support.

Included in the Gann arsenal are a number of techniques including Gann Angles, Gann Fans, Gann Grids and Cardinal Squares. Depending on who you believe, Gann's methods either made him a multi-millionaire in the early years of the last century, or he died in relative poverty, supporting himself with the sales of his books and tools. Day trading experts do not normally pay too much attention to the work of Gann, as it relies on a 45 degree basis which is too arbitrary.

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