A demonstration showing how to use WD Gann's Wheel for calculating market price and time. Gann discovered when an equality relationship occurred between time and price, a trend reversal in a market could take place. To understand this relationship it is necessary to know how a Gann Wheel can be used to calculate time or price objectives. The Gann Wheel center at left begins at the number "1" and increases one unit clockwise. The orange line shows a full rotation, or 360 degrees up from a price of 34 that would target 61.
WD Gann's analysis can be made to look extremely complex. But like Fibonacci retracements not all calculations are of interest. Let's take a closer look at the price projection technique using a Gann Wheel. Then we will define the most critical Gann angles for specific financial markets. Draw a circle that touches all four sides of the largest square. The circle has 360 degrees to complete a full rotation. The top of the circle can be viewed as our starting point or "ground zero". Now divide the circle into equal quarters. As we move clockwise to the right corner we would cross the 45 degree angle of the circle. The first quarter at the right angle is 90 degrees and directly across from the top is 180 degrees. Continue moving clockwise until we return to the start and complete the journey around the circle at 360 degrees. Here's how this structure becomes a calculator... Find the number 15 on the Gann Wheel. If a stock was trading at a price of $15, what are the price objectives using a Gann Wheel? The number 15 is perfectly aligned under the zero and 360 degree angle marked on the top of the Wheel. Because the number 15 is aligned with zero we need make no further adjustments, just read the Gann targets straight off the wheel. The 45 degree price objective from 15 is 17. It is the next number that aligns with the 45 degree line that travels towards the top right corner. The number 19 crosses were the 90 degree line was drawn. We would use the phrase, "$19 is 90 degrees up from $15." Now skip over to 180 degrees and find $23 is directly opposite $15. We would still say, "23 is 180 degrees up from 15". At 270 degrees $28 is the price objective. A full 360 degrees up from 15 is $34. That is how a Gann Wheel is used. Why did we skip the bottom right corner angle which would be 135 degrees? Because like Fibonacci, some calculations are more important than others. The Fibonacci ratios 0.382, 0.500. 0.618, 1.000, and 1.618 are relationships we know are the critical ratios to identify. This is also how the various Gann angles are interpreted. We have a circle that is divided into quarters and sixths, but we also need to divide 360 degrees into thirds because 120 degrees and 240 are extremely important. The angles of greatest interest in financial markets are 45, 90, 120, 180, 240, 270, 315, and 360.
