Technical Indicator MEGA Reference Part 24 – Fibonacci Fan

Fibonacci Fans

Fibonacci Fans use Fibonacci ratios based on time and price to construct support and resistance trendlines; also, Fibonacci Fans are used to measure the speed of a trend’s movement, higher or lower.

  • If prices move below a Fibonacci Fan trendline, then price is usually expected to fall further until the next Fibonacci Fan trendline level; therefore, Fibonacci Fan trendlines are expected to serve as support for uptrending markets.
  • Likewise, in a downtrend, if price rises to a Fibonacci Fan trendline, then that trendline is expected to act as resistance; if that price is pierced, then the next Fibonacci Fan trendline higher is expected to act as resistance.

The chart below of the S&P 500 exchange traded fund (SPY) shows an uptrend that retraced to the 38.2% Fibonacci Fan:

Sourced from OnlineTradingConcepts.com All copyrights belong to their respective owners.

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