Fibonacci Fans

Fibonacci Fans are drawn absolutely in the same way, as speed resistance lines, with exception, that on a vertical line levels 23,6, 38,2, 50, 61,8, 76,4 are drawn.

It is considered, that these lines will serve as levels of support for a developing retracements or a new descending trend and after break - levels of resistance.

Fibonacci Fans are displayed by drawing a trendline between two extreme points; for example, a trough and the opposing peak. Then an "invisible" vertical line is drawn through the second extreme point.

Three trendlines are then drawn from the first extreme point so they pass through the invisible vertical line at the Fibonacci levels of 38.2%, 50.0%, and 61.8%. (This technique is similar to Speed Resistance Lines.)

The chart below shows how prices find support at the Fan lines. You can see that when prices encountered the top Fan line, they were unable to penetrate the line for several days. When prices did penetrate this line, they dropped quickly to the bottom Fan line before finding support.

Also note that when prices bounced off the bottom line, they rose freely to the top line where they again met resistance, fell to the middle line and rebounded.