Gann levels represent cross of Gann angles. These levels do not have name as such, but since W. D. Gann repeatedly mentioned importance of levels in the crossing point, we will call them Gann levels. “Gann levels” is not a price line, but is a price area. This analytical method underlies Murrey levels theory. But Murrey took only one constant cycle and price line as the ground, whereas cycles change. That is exactly why Murrey Levels do not always work as we would like them to and often rebuilding of levels takes place.
To get Gann levels, square is drawn, and the squaring level is chosen depending on cycle. On the image we see “Square 4”, in drawing square we get the first five levels (horizontal lines) Taken as drawn on the picture, these levels will not be helpful in forecasting price, though Murrey took this representation as the ground. These levels only show price zone, where price is located.
Further in the crossing point of angles we draw horizontal lines and point out prize areas. For convenience, we will numerate those areas from 0 to 7 and paint black – thereby getting northern levels and will paint red southern levels from 7 to 0. Depending on traits of an angle, levels have the same traits. Gann levels have a rather bad feature: price often pricks angle, that's why levels are required. Depending on the way price moved to an angle, further movement of price is defined:
- Price breaks angle with one candle. In this case, price moves to level's border and gets back to test angle. If price rolls back from angle, it enters price zone of nearest level and break up of this level will show further movement.
- Price rolls back from angle. In this case, price turns and moves to opposite level.
- Price stops and consolidation on level starts; upon that, price moves around angle as it wrapped it. And only break up of level gives price direction.
We can use levels as a separate tool, but in combination with angles they give a better effect. To get rid of unnecessary lines, we will remove all angles and only levels will remain.
Angles are numerated 0 -7, but there is one more level painted red. Upon leaving zone of red levels by price, phase of a new cycle begins. It is necessary to take into account that these levels only work until square is formed - in this case 4 time zones, then levels rebuild no matter price leaves red level or not. If initial cycle is chosen correctly, price can leave red levels.
3, 5, 7 levels are momentum, as a rule, on this level price is very fast. 1,4,6 are consolidation levels. 0 and 2 levels are able to reverse the price.
One more method of drawing these levels is totally different from square method, because it is based on crossing of angles of two different squares. These levels are required to forecast long-term price. On the image we can see two squares built on vibration post factum. Angles in such squares are not efficient for forecasting, they serve to build levels. We will prolong lines on the picture and on crossing of red and black angles will draw horizontal lines.
We will remove all unnecessary things and will leave only the levels received on crossing of angles of different squares. Also we will numerate levels for convenience. Zone of level 1 is consolidation, upon breaking price moves to the second level. Level 2 is momentum movement, on this level price is very fast. On the image you can see that this movement is retracement, because black Level 2 is many times less that red level 2, the same is with black level 1, at which levels are accumulated, whereas on red level 1 there is just 1 additional level.
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