Angles from Tops

Introduction

Most traders draw Gann angles only from bottoms. But Gann also drew angles down from tops, and he considered the relationship between angles from tops and angles from bottoms very important. In this lesson, you will learn how to use angles from tops to judge weakness and spot trend changes.

Down Angles from a Top

From a major top, draw angles downward:

• 1x1 down: price falls one unit per time unit.
• 2x1 down: price falls two units per time unit (steep).
• 1x2 down: price falls one unit per two time units (flatter).

Gann's Rules for Angles from Tops

• As long as the price stays below the 1x1 angle from the top, the main trend is down.
• When the price crosses above the 1x1 angle from the top, it shows strength and the downtrend may be ending.
• The steeper the down angle the price stays under, the weaker the stock.

Where Angles Meet

When a down angle from a top meets an up angle from a bottom, that point in time and price is very important. Gann watched these crossing points for a change in trend.

Example: Bank Nifty (Illustrative)

Bank Nifty makes a top at 54,000. Scale: 100 points per day.

• 1x1 down angle after 15 days = 54,000 - 1,500 = 52,500.
• Bank Nifty falls to 51,200 by day 15, below the 1x1: weak.
• By day 25, the 1x1 down angle is at 51,500. Bank Nifty rallies and closes at 51,700, above it.
• At the same time, the 1x1 up angle from the recent low of 50,500 (drawn 12 days earlier at 100 points per day) is at 51,700.
• Both angles meet near 51,500 to 51,700, and price crosses above the down angle. Gann would read this as a likely change in trend to up.

Angles from Tops in a Bull Market

In a strong bull market, reactions are short, and the price usually crosses above the 1x1 down angle from a minor top quickly. This shows the main uptrend is resuming. It is a good point to add to positions with a stop-loss below the reaction low.

Angles from Tops in a Bear Market

In a bear market, rallies fail below the 1x1 or even the 2x1 down angle from the top. Each failure at a down angle is a selling point for short-term traders.

Combining with Resistance Levels

Angles become stronger when they fall at the same price as a Gann resistance level (such as the halfway point of a range) or a round number. You will learn resistance levels in the next lessons.

Apply on GoPocket

For each stock in your GoPocket watchlist that has fallen from a major top, calculate the 1x1 down angle each week. When the stock closes above it, add the stock to a separate "Trend Change" watchlist and look for a Gann buy setup.

Frequently Asked Questions

Can I short when price fails at a down angle?

In India, overnight shorts need futures or options, which carry high risk. Beginners can use failures at down angles to avoid buying or to exit longs.

Which is more important, angles from tops or bottoms?

Both. Their crossing points are the most important.

Key Takeaways

• Below the 1x1 from a top = weak.
• Crossing above it signals a possible trend change.
• Where top and bottom angles meet, watch for reversals.

Disclaimer: Illustrative figures only. Derivatives involve high risk.