Trading term

What is Fibonacci fan?

A Fibonacci fan draws diagonal trendlines outward from a swing point, passing through the 38.2%, 50% and 61.8% retracement levels. The result is sloping support and resistance that rises or falls as time passes.

It applies the same ratios as retracement, but diagonally. You anchor it to a swing low and swing high; the tool marks the retracement levels at the far end and draws a line from the anchor through each one, extending forward. The result is a fan of three rays spreading out from the origin.

The difference from horizontal levels is that a fan line accounts for time. A horizontal 61.8% level sits at the same price forever, but in a trending market the price at which a pullback is 'still healthy' rises as the trend advances. A fan line rises with it, so the support level it implies today is higher than the one it implied a month ago.

That makes it more useful in steadily trending markets and less so in ranges, where the sloping lines quickly wander away from where price is actually trading.

Levels that rise with time
38.2%50.0%61.8%anchorswing highThe rays RISE with time — the level a healthy pullback must hold gets higher as the trend ages.That is the whole difference from a horizontal retracement line.

The same ratios drawn as diagonal rays from the swing low. Unlike a horizontal level, the support a fan implies climbs as the trend ages.

For example

A stock rallies from $40 to $70 over three months. A fan anchored to that swing draws rays through the 38.2%, 50% and 61.8% levels. Two months later the 50% ray has risen to around $62 — so a pullback holding $62 is holding the fan, even though the horizontal 50% level is still down at $55.

Go hands-on in Premium

That's Fibonacci fan in theory — it clicks when you read it on a live chart. Practise it hands-on in the TradeWize Premium Technical Analysis track.

Explore Premium →

Why it matters to you

In a strong trend, horizontal retracement levels go stale — price never comes back far enough to touch them, so they stop being useful. A fan keeps producing a level that moves with the trend, which is why it suits position trades held over months rather than days.

⚠ Steep fans go stale fastest

The steeper the original swing, the faster the rays climb, and a very steep fan line will be far above price within weeks — implying support at a price the market has no interest in. Fans work on measured, sustained trends. Anchor them to a substantial swing, not a sharp spike.

Frequently asked questions

What is a Fibonacci fan?

It's a tool that draws diagonal lines from a swing point through the 38.2%, 50% and 61.8% retracement levels, creating sloping support and resistance that moves with time rather than staying at a fixed price.

How is a Fibonacci fan different from Fibonacci retracement?

Retracement draws horizontal lines at fixed prices. A fan draws diagonal rays, so the level it implies rises or falls as time passes — which suits a trending market where price never returns to the original horizontal levels.

How do you use a Fibonacci fan?

Anchor it to a clear swing low and swing high, then watch how price interacts with the rays. In an uptrend, holding above a fan line suggests the trend is intact; breaking below one and failing to recover suggests it's weakening.

When does a Fibonacci fan not work well?

In ranging markets and after very steep swings. The rays keep climbing regardless of what price does, so in a range or after a spike they quickly end up far from where the market is actually trading and stop describing anything useful.

Related terms

Anchored VWAPAnchored VWAP is a volume-weighted average price that starts from one candle you choose, rather than resetting at the start of each session. You anchor it to a meaningful event — an earnings gap, a major low, a breakout — and it tracks the average price everyone has paid since.Ascending triangleAn ascending triangle is a bullish continuation pattern: a flat horizontal resistance line on top, with a rising trendline of higher lows beneath it. As the higher lows squeeze price against the ceiling, pressure builds — and it usually resolves with a breakout up through the resistance.ATR (Average True Range)ATR (Average True Range) measures how much a security typically moves in a period — its volatility — as an average of recent trading ranges. It doesn't say which direction price is heading, only how far it tends to travel, which makes it a core tool for stop-losses and position size.Bearish engulfingA bearish engulfing is a two-candle reversal pattern in which an up candle is followed by a down candle whose body completely covers it. The second candle opens above the previous close and closes below the previous open.
← Back to the full glossary