Original Gann Swing Chart Rules [AlgoFuego]
The person watching the tide coming, wanting to pinpoint the exact spot that signals the high tide, places a stick in the sand at the points where the incoming waves reach until the stick reaches a position where the waves no longer rise, and eventually recedes enough to show that the tide has shifted.
This method is effective for monitoring and identifying tides and floods in the stock market.
In Wall Street Stock Selector, Gann pointed to an actual monthly chart of the Dow Jones Industrial Average, walked through it month by month, and showed exactly how a single bar in March 1926 set up a reversal that wouldn't confirm until June of the following year.
This was only one month's reaction the same as March 1925. The market held in a dull narrow range for about 2 months while accumulation was taking place and in June the main trend turned up again.
Gann never left his swing chart method to interpretation. He defined exactly which bars matter, exactly how slope is determined, and exactly where a peak or a valley is confirmed. We translated every one of those rules into a strict algorithmic framework — including the trickiest case of all: the outside bar.
Read that quote again. It’s not an opinion or a narrative, it’s a mechanical classification of what the market was doing. For months, price action simply “held in a dull, narrow range.” Then, the moment that range was broken, Gann’s assessment changed immediately and without ambiguity: “in June, the main trend turned up again.”
The engine is elegant precisely because it refuses complexity. Every bar is tested against a single question — did it extend the tide? If yes, the stick moves. If no, the bar is discarded. Out of that repeated test, peaks, valleys, and full trend structure emerge.
Each bar is compared against the last confirmed trend bar. Did it print a new high above it, or a new low below it? Gann: "The trend bar is everything — this is the only bar that matters."
Any bar that fails the test is a hidden bar — filtered out entirely. It plays no role in slope, swing points, or trend direction. This single filter is what removes market noise.
When a single bar exceeds both the prior high and low at once, slope direction is resolved using the bar's open-to-close sequence — bearish bars run Open→High→Low→Close, bullish bars run Open→Low→High→Close.
The instant the slope reverses, the prior extreme is locked in as a Peak or a Valley — the stick that marks exactly where the tide turned. Main and Primary trend layers confirm independently.
The logic flows in one direction: structure drives everything. The moment a new trend bar breaks the previous Peak or Valley, a reversal or continuation is confirmed — not after price "feels" different, but precisely when the stick in the sand says the tide has shifted.
The Main Trend reacts to the immediate swing. The Primary Trend filters for the larger structural wave. Both run from the exact same 8 rules — only the sensitivity to noise differs.
Tracks the most recent swing structure bar by bar. Confirms Peaks and Valleys quickly, giving the earliest possible read on a potential reversal — ideal for tactical entries and tight risk control.
Filters the Main Trend's swings further, confirming only the larger directional wave. Acts as the strategic filter — Main Trend signals aligned with the Primary Trend carry far higher reliability.
A swing point alone doesn't confirm a reversal — Gann required a specific structural relationship between the new swing and the one before it. There are exactly three ways a Valley can give birth to a bullish reversal, and three ways a Peak can give birth to a bearish one.
The new Valley (V2) prints lower than the previous Valley (V1) — yet the very next trend bar breaks back above the prior Peak. The deeper low is absorbed and reversed.
The new Valley (V2) lands at essentially the same level as the previous Valley (V1) — a double-bottom structure. Confirmation comes once price clears the intervening Peak.
The new Valley (V2) prints higher than the previous Valley (V1) — the clearest signature of building demand. Once the prior Peak breaks, the uptrend reversal confirms with the highest structural conviction.
The new Peak (P2) prints higher than the previous Peak (P1) — yet the next trend bar breaks back below the prior Valley. The higher high is rejected and reversed.
The new Peak (P2) lands at essentially the same level as the previous Peak (P1) — a double-top structure. Confirmation comes once price breaks the intervening Valley.
The new Peak (P2) prints lower than the previous Peak (P1) — the clearest signature of fading demand. Once the prior Valley breaks, the downtrend reversal confirms with the highest structural conviction.
The Golden Rule confirms the swing. Everything after — the Moving Average Activator, the ATR Activator, the Bar Counter, and the Current Bar Mark summary — runs automatically on top of it. You read the tide. The system manages the trade.
Trend Bar Ratio (Illustrative)
Statistics are illustrative. The Current Bar Mark updates live as new trend bars and outside bar scenarios are confirmed.
Every new bar is compared exclusively with the last confirmed trend bar — all hidden bars ignored entirely. Produces noise-free swing analysis that reflects only genuine market direction, especially effective in ranging conditions.
A complete rule set for bars that exceed both the prior high and low simultaneously. Each rule precisely resolves the resulting slope direction and whether a new swing point forms — no ambiguous cases left unhandled.
Three bullish models — Dropping Valley, Equal Valley, Rising Valley — and three bearish models — Rising Peak, Equal Peak, Dropping Peak — each pinpointing the exact structural formation that precedes a confirmed trend change.
Calculated exclusively from the closing prices of trend bars — the only bars Gann considered meaningful. Updates only on new highs or lows, making it materially more informative than a standard MA in choppy markets.
A volatility-based trend filter built on Moving Average Activator data, so it inherits the same noise reduction. Functions like a SuperTrend but with filtered inputs — fewer false flips in ranging conditions.
Tracks bars since the last trend change on both Main and Primary layers, and summarizes all active rules for the current bar in one glance — direction, activator state, and trend alignment, instantly.
Both layers read the same price action and apply the same 8 rules. What changes is how much noise they tolerate before confirming a swing. Toggle between them and watch how the same tide produces two distinct structural reads.
The Main Trend applies the Golden Rule directly to raw price bars. The instant a trend bar breaks the prior swing point, a new Peak or Valley confirms — fast, responsive, and tactical.
A bar prints a new high or new low against the last confirmed trend bar — the Golden Rule comparison.
The swing continues in the same direction — slope holds, no new marker required yet.
Slope reverses — the prior extreme locks in as a Peak or Valley on the Main Trend layer immediately.
Original Gann Swing Chart Rules is part of the complete AlgoFuego library. One subscription unlocks all 6+ indicators — Astrology, Time Cycles, Radio Wave, MA-DNA, and every future addition. No individual purchases. No upsells.