 # Fibonacci Fan Explained , Guide Part 20

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What is a Fibonacci fan?

A Fibonacci fan is a chart construction technique used in technical study that uses the Fibonacci interaction to graphically predict support and resistance levels.

The Fibonacci quantity can be used to explain the proportions in things, from the smallest building blocks of nature, such as atoms, to the most advanced patterns in the world, such as unimaginably monumental celestial bodies. Nature relies on this inborn proportion to preserve equality, but financial markets also seem to adapt to this "golden ratio."

Understanding Fibonacci fans

Fibonacci fans are sets of sequential trend lines drawn from a valley or peak by means of a group of views dictated by Fibonacci retracements. To create them, a trader draws a trend line from which to base the fan, which primarily covers the low and high costs of a cost over a defined period of time.

To achieve the retracement levels, the trader divides the cost difference at the lower and preeminent end by the proportions determined by the Fibonacci series, commonly 23.6 percent, 38.2 percent, 50 percent, and 61.8. percent. The lines formed by connecting the starting point of the base trend line and each degree of retracement make up the Fibonacci fan.

Traders have the ability to use the Fibonacci fan lines to guess key points of view of resistance or support, in which they could wait for cost trends to reverse. When a trader identifies patterns on a chart, he can use those patterns to foreshadow future cost movements and future levels of support and resistance . Traders use predictions to time their trades.

Fibonacci Interaction Reversal Strategies

The Fibonacci sequence begins with the digits zero and one, then is infinitely born with the next number in the sequence equal to the sum of both numbers that precede it (for example, 0, 1, 1, 2, 3, 5, 8, 13, 21, 35, etc.). The number of adjacent terms equates to about 1,618, represented in mathematics by the Greek letter phi (y) and, coincidentally, it underlies a huge proportion of naturally occurring patterns. For unknown reasons, activity costs also appear to act in patterns consistent with the Fibonacci index.

There are technical studies based on the Fibonacci ratios for the cost and time axes of the charts. Analysts also have the ability to use retracements to generate arcs or fans using arithmetic or logarithmic scales. No one seems to know if these tools work as the stock markets display any kind of natural boss or as Fibonacci indices are used by various investors to forecast cost movements, making them a self-fulfilling prophecy. Be that as it may, key support and resistance levels often tend to happen at the 61.8 percent degree in both bullish and bearish trends.

To derive the 3 key causes that are typically applied in technical research based on the Fibonacci series, simply discover the quantity of a number in the series to its neighbors. Adjacent numbers generate the inverse of phi, or 0.618, corresponding to a 61.8 percent retracement degree. Numbers separated by 2 places in succession provide a ratio of 38.2 percent, and numbers separated by 3 places provide a ratio of 23.6 percent.

Fibonacci fans vs. Gann fans

Gann fans are another form of technical study based on the initiative that the market is geometric and cyclical in nature. A Gann fan consists of a sequence of trend lines called Gann angles. These angles are superimposed on a cost chart to show probable support and resistance levels. It is implied that the resulting picture will help technical analysts to predict cost changes.

Gann's admirers are named after their author W.D. Gann . Gann believed that his angles could herald future cost movements based on geometric angles of time versus cost. Gann has been a 20th century market theorist. However, instead of relying on the 1.618 Fibonacci Golden Ratio, Gann believed that the 45-degree angle was the most relevant. Later, Gann's fan draws extra angles at 82.5, 75, 71.25, 63.75, 26.25, 18.75, 15, and 7.5 degrees. Therefore, the Gann fan adds angles based on cost movements in time in the following proportions: 1: 8, 1: 4, 1: 3, 1: 2, 1: 1, 2: 1, 3: 1, 4 : 1 and 8: 1.

Its use is personal.

You can be based on 45 degree angle. Or Putting from Start of trend to End of trend, Like a Fibonacci Retracement , both are valid.

45 Degree Example:

Modo Fibonacci:

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