Fibonacci and Gann Applications in Financial Markets

Gann, The Misunderstood Analysis 171
Figure 9.24
further. The extended period of congestion about the December 2002–April 2003
area has been constrained by two levels once again.
Looking at the calculations from the high in September (see Figure 9.24), again
the dates are not good but the price levels are very strong and again capture the
period of consolidation up to April 2003.
These two hexagons can be used for increments of any period so for weekly data
the increment on the day count should be set at seven. The usefulness of the hexagon
seems to be dependent on the asset class, but the generation of price levels is
not. Analysts should not dismiss this technique out of hand but experiment with further
application by trial and error.
Most analysts who use Gann analysis only use the most simple of the theories of
Gann and in the main rely on charting packages for their analysis. This is fine if the
analyst is just showing off but to apply real analysis takes time. I have known analysts
who simply use the default settings on charting packages to construct fanlines
and this is not good enough. It is critical not only that the origin of the fan system is
placed on a key level but that the increments are correctly used. For example, many
decimal prices are in general too small to have a 1 � 1 line, i.e. one day to one tick
formulation, and I have found that using one day by ten ticks often gives a better
looking result. In the case of those instruments that still use the 32nd format, further
modification has to be used and here although one day by one tick (1/32) looks fine
some tweaking has to be done to make the one point (32/32) at 32 days. In any case,