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The Gann Fan is made up of nine angles based on this concept. These trend lines are used to indicate support and resistance levels. When one line is broken prices should move to the next line. The drawing of these lines should start from either a market top or bottom.
A Gann Fan is used to define a market direction or a new trend. For example, a bull market exists if prices are maintaining strength between the 1×2 lower line and 1×2 higher line. A bear market would be the exact opposite of the previous scenario.
To use Gann Fan, we define the last significant peak or low and we drag it in direction of the following movement under 45 degree angles(see also Gann net).
The lines of Gann help traders to spot the potential supports and resistance.