Gann Fan and Andrews Pitchfork are two popular tools used by analysts or investors for technical analysis (TA) to identify potential support and resistance levels and predicting price movements.
Gann Fan: The Gann Fan is named after its creator W.D. Gann, a renowned trader and analyst. It consists of a series of diagonal trendlines drawn from a significant high or low point on a price chart. The Gann Fan is based on the concept that price and time have a geometric relationship.
The Gann Fan includes three main trendlines: i) the 1x1 line that represents a 45-degree angle, ii) the 1x2 line that represents a 26.6-degree angle, and iii) the 2x1 line that represents a 63.7-degree angle. These angles are derived from the principles of Gann's geometric angles. Traders use the Gann Fan to identify potential support and resistance levels and to determine the strength and direction of a trend.
Andrews Pitchfork or Median Line tool: The Andrews Pitchfork also known as the Median Line tool, it was developed by Dr. Alan H. Andrews. It is used to identify potential support and resistance levels within a trending market. The tool consists of three parallel trendlines drawn from three consecutive significant peaks or troughs.
The middle line of the Pitchfork is called the median line, while the upper and lower lines are referred to as the upper and lower parallel lines, respectively. The Andrews Pitchfork is based on the concept that price tends to gravitate towards the median line and may act as support or resistance.
Traders use the Andrews Pitchfork to identify potential reversal or continuation points in a trend. When the price approaches the median line, it may indicate a potential turning point. It could signal a continuation of the trend if the price breaks above or below the Pitchfork.
Both the Gann Fan and Andrews Pitchfork are subjective tools that require the trader to identify the significant points from which to draw the trendlines. Analysts are often used in combination with other technical analysis techniques and indicators to confirm potential support and resistance levels and to make more informed future trading decisions.
It is important to note that, while these tools can be valuable, their effectiveness can vary depending on market conditions and the skill of the analyst. Traders should always exercise caution and use proper risk management strategies when applying these tools in their analysis.
