We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is a Fibonacci Fan?

By Charity Delich
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

A Fibonacci fan is a line chart that uses Fibonacci ratios, based on time and price, in order to illustrate support and resistance levels. Some traders use Fibonacci fans and other Fibonacci methods as tools for analyzing levels of support and resistance in financial markets, such as the stock, futures and currency markets. Other Fibonacci techniques used by traders can include retracements, arcs, extensions and time zones. Fibonacci methods attempt to predict when changes to financial market trends will occur.

Fibonacci fan charting techniques can demonstrate the speed of a trend’s movement – from low to high. Three diagonal Fibonacci fan lines are usually used to build a Fibonacci fan chart. These lines help show key points of support and resistance.

Creating a Fibonacci fan chart requires you to first draw a trend line between two points on the chart. Typically, these two points represent a high and a low during a specified time period. Next, the vertical distance between these two points is divided by three primary Fibonacci ratios – 38.2%, 50% and 61.8%. The three resulting numbers each signify a level within the vertical distance and are included as points on the chart. Three Fibonacci fan lines are then drawn from the leftmost point on the chart to each of the three numbers that represent the primary Fibonacci ratios.

In the chart, support levels represent the point at which a buyer influences prices and keeps them from dropping. On the other hand, resistance levels represent the position at which a seller controls prices and stops them from increasing. A deal may take place when the buyer and the seller agree to conduct a transaction at a mutually agreed upon price. Traders generally believe that prices will increase when support levels are at play and decrease when resistance levels are in motion.

Traders often expect prices to drop if the prices on the Fibonacci fan chart drop below the trend line. This drop is expected to continue until the next trend line level is reached. Conversely, if prices increase to meet a trend line, the trend line is expected to serve as resistance. If that price is met, the next highest trend line is the next level of resistance.

Fibonacci fan charts are not foolproof market predictors. In addition, they often prove difficult for traders to read and interpret. They can also be time-consuming to chart out. As a result, many traders use Fibonacci fans or other Fibonacci tools in combination with other trend-predicting methods.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Discussion Comments
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.