From The Free Forex Encyclopedia
A Gann Grid represents an intersecting series of Gann Lines over laid on a price chart; Gann's teachings stress the importance of the 45 degree line representing a 1:1 relationship between time and price (1 unit of price to 1 unit of time). When price trades above the 45-degree line it is an indication of an up-trending market; when price trades below the 45-degree line it is an indication of a down-trending market.
The Gann Grid is a grid of lines that is used to help in indicating the trends of a specific item. The grid is built with a set of 45 degree angles. These are called Gann Lines. The goal is to show trends, each built at 45 degrees. The concept that was given by Gann says that any line that has a slope that is 45 degrees will represent a long term trendline. This can be either ascending or descending. Either way, this will show the market trend.
For those prices that hold at below the ascending line, the Gann concept says that this will predict a bull direction. If the prices hold below the descending line, it is more likely to be a bear market. When there is an intersection of the Gann lines, this shows that there is a breaking of the basic trend. When there is a further intersection of the Gann lines, this can show that there is a new trend happening. Still, it can show a fully balanced market when the prices go down to the line during the ascending trend – and price as well as time is then balanced.