Fibonacci_3. Learn Forex Fibonacci Fan and Arcs

Lesson 3: Learn Forex Fibonacci Fan and Arcs

Fibonacci ratios are used in different ways by making use of Fibonacci fans and
arcs, tools to find potential support and resistance levels. Just like other Fibonacci
tools, fans are drawn from the swing low to the swing high.

The tracing tread lines of 38.2%, 50%, and 61.8% can be seen in the chart. The
trend lines can then be used to find the support and resistance areas.

As you can see from the chart, the prices bounce several times from the fan
lines. As the price breaks the 61.8% line, it is signaling a trend consolidation. It does
not necessarily mean that the trend is reversing; it could also be that the trend is
paused and maybe stuck in a range and therefore, we should use range trading
strategies.

Fibonacci arcs work exactly the same way. They are drawn from the swing high
to swing low and show the potential support and resistance areas.

Here you can see the prices trading down along the 38.2 arc line until it breaks
the previous lows and then continues to take the lower leg next.