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 (see: Support & Resistance).
- 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:
Next Page - Fibonacci Time Extensions
The Fibonacci ratio is also used to predict areas of time in which price should change course; Fibonacci Time Extensions are discussed next.
| 1. Fibonacci Basics & Fibonacci Retracements | 3. Fibonacci Fans |
| 2. Fibonacci Arcs | 4. Fibonacci Time Extensions |