Investment and investment planning has always been an integral part as well as a complex decision for any individual or a family. Most of us are in search of a perfect formula to optimize our investments. But, there very few who succeed in their search.
A discipline and objective approach is the key to develop an optimum investment plan. Technical Analysis is the science which inculcates the above characteristics in an individual. More than hundred years old discipline, technical analysis has yielded awarding returns in the markets all over the world under different economic conditions. Like any other subject, technical analysis is also a growing discipline. Continuing research and innovations over time have augmented value to this peerless art.
To be abrupt with the innovations in technical analysis is of prime importance for a knowledgeable investment plan. If you want to have an upward growth trajectory for your investments you should make yourself aware of the latest developments in technical analysis and follow them earnestly.
Gann Fans
In continuation to the previous article, here I will discuss a technique of Gann theory known as Gann fans. As already mentioned in previous article that special emphasis is laid on geometrical numbers in Gann theory, fan lines are at particular geometrical angles. This is to have a balance between price and time. A perfect balance between price and time is attained by 45 degree angle. This can be termed as the median line. All other lines are at different angles. These lines act as support when the markets are falling and the same lines act as resistance in rising markets. While overlaying it on a chart the lower end is at the bottom of the rally and the other end is at the top. The fans help in predicting the top or bottom based on the signals by other indicators. In the long term chart of Nifty below Gann fans have been overlaid.
The chart above illustrates how the Gann fans have acted as support levels when the markets were falling. The same lines become resistance when the markets start the upmove. The important thing in the above chart is that the lwest hit by nifty coincides with the lowest line of Gann fans.
The above example of Nifty makes it more evident that Gann fans should be applied to predict a future trend reversal in accordance with what the indicators are telling.
About the Author
Mr Vivek is graduate in Mathematics and Computer Science and has done his Masters in Finance. He has worked with leading banks and broking houses. of India (Standard Chartered Bank, Kotak Securities Ltd. And Edelweiss Capital) and has good feel and experience of the markets.
He has been awarded DITA(Diploma in Technical Analysis)by IFMT and is Senior Technical Analyst with Equityrush.
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