What Does Fibonacci Fan Mean? A charting technique consisting of three diagonal lines that use Fibonacci ratios to help identify key levels of support and resistance. Fibonacci fans are created by first drawing a trendline through two points (usually the high and low in a given period), and then by dividing the vertical distance between the two points by the key Fibonacci ratios of 38.2%, 50% and 61.8%. The result of these divisions each represent a point within the vertical distance. The three 'fan' lines are then created by drawing a line from the leftmost point to each of the three representing a Fibonacci ratio.
Fibonacci Fan represents price future support and resistance levels.Traders can expectfor the price either to stay in the fan and move in between lines, or break out of it. When a price holds at any Fan line it indicates presence of support/resistence there. Once the price breaks through the line,it won t usually stop till the next Fan line is met. If the price quickly passes a Fan line,it will freely move to the next Fan line. So, Fibonacci Fan gives traders a simple but effective way to predict future price movements.
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