Gann Grid

Gann - a legendary Forex trader - stated that line at 45º demonstrates a long-term market tendency very well. This line is known as Gann line or “balance angle”. The line can be both upward or downward.

Gann Grid is the set of ascending and descending Gann lines overlapped on price chart. That is used to determine the balance between price and time. The main concept of its operation is laid in the notion of the balance line. When the price exceeds Gann line, upward tendency rules, and when price is below the line, we face downward tendency. Under bullish trend, the price tends to parallel upward Gann lines, and under bearish trend, it takes the side of downward lines. When the price crosses the balance line, there is a high probability of trend's termination (correction) or reversal.

Building Gann Grid

This process is based on the same principles on which drawing of Gann lines is based. To build Gann grid in Meta Trader 4 trading terminal, one is supposed to choose “Insert – Gann – Gann Grid” in the toolbar and mark reference points on the chart 2 setting the size of cell (zone).

Pic. 1

Gann's initial and final points are out on extreme points of the price. More often they are opposite: from maximum to minimum or vice-versa. But also it is possible to build posints from highest to lowest, from lowest to lowest, or from close price to opening price between certain time intervals. Let's consider example of Gann Grid's operation on the price chart.

  

Pic. 2

Initial and final points were marked from minimum to the next minimum (after the first correction). Upon the bounce of the price up, (point 1), we expected the price neat the next ascending parallel Gann line (point 2), which was easily reached by the price. We expect that price will move to the first line – point 3. Here we also face break of the balance line down and expect price to be even lower, but the market is not ideal, and the price returns to the point above Gann line (point 4) and renews bullish trend. At this point we can search entrance for purchase with objectives near the line, which earlier acted as resistance line. Basically here trading within the range of descending range took place, and this range is constituted by Gann lines. Upon breaking up the balance line (point 6), we at least expect to get rollback and forecast nearest objectives in the next zones (p. 7) Now we have got descending parallel lines of Gann and they will work until a new break up takes place (p. 8), afterward the price reverses again.

The point of Gann Grid is easy – paying attention to boundaries of graph diamond. The most crucial thing is behavior of the price along the lines, at the crossing point of diamonds, regularities and logic of movement.

Gann grid is a strong tool and can be combined with time zones method, Gann fan, horizontal support/ resistance lines, pivot lines and other tools of technical analysis.