Wednesday, July 9, 2008

Fibonacci+Fan analysis

You can see that when prices encountered the top Fan line , they were unable to penetrate the line for several days. When price did penetrate this line,they dropped quickly to the bottom fan line before finding the support again.

Also know that prices bounced off the bottom line .They rose freely to the top line,where they again met resistance, fell to the middle line and rebounce.
According to the free dictionary:

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.

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