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.
This tool is helpful in forex trading.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
in forex trading 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.
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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 in forex trading is similar to Speed Resistance Lines.)
In the market
of forex trading this indicator supplies you with valuable data about support zones for price movement.
The prices
find support at the Fan lines. For example, when prices encounter the top Fan line, they are hardly able to penetrate the line. When prices penetrate this line, they dropp quickly to the bottom Fan line before finding support.
In forex trading,
we advise you to test this indicator in demo account trading before using it in real account.
