# Fibonacci Fans & Arcs

Continued from Fibonacci Time Zones and Ratios

#### Fibonacci Fans

While Fibonacci retracements and extensions measure changes in price (y-axis, horizontal bands), and Fibonacci time zones and ratios measure changes in time (x-axis, vertical bands), Fibonacci fans measure changes in both time and price.

#### Rising Fibonacci Fan

Fibonacci fans are calculated using the same pivot cycle highs and lows referenced earlier in this section. However, rather than producing horizontal or vertical bands, a Fibonacci fan will originate from the pivot cycle low (in the case of a rising Fibonacci fan) and end at the pivot cycle high. Diagonal lines then extend upward in Fibonacci ratios based on the slope, m, from the pivot point low to the pivot point high.

M= y-y1/x-x1

In the case of Fibonacci extensions or retracements, the time (period) it takes a price chart to move from a pivot cycle high to a pivot cycle low is not a factor that impacts support and resistance levels.

For Fibonacci fans, the time (period) affects the slope of the corresponding support and resistance levels, and therefore both time and price are factors. The faster the price move, the steeper the slope.

Fibonacci fans are calculated automatically using charting software in a one-step process. However, it is important to understand how and why these fan lines are drawn. To draw these lines manually is a two-step process.

First, chart the Fibonacci retracement levels from the pivot cycle lows to the pivot cycle highs. This step creates horizontal Fibonacci bands in descending order (i.e. the 23.6% band is higher than the 38.2% band).

Then, draw a diagonal line from the pivot cycle low to the point where the horizontal band intersects an imaginary vertical line extending through the pivot cycle high. These diagonal lines often serve as likely areas of support and resistance. The exercise yields a chart that looks like the one below using standard software tools: #### Falling Fibonacci Fan

The falling Fibonacci fan is applied in a similar way to the rising Fibonacci fan, except the process is inverted. Falling Fibonacci fans are used during corrective patterns.

For a falling fan, chart the Fibonacci retracement levels from the pivot cycle highs to the pivot cycle lows. This step creates horizontal Fibonacci bands in ascending order (i.e. the 38.2% band is higher than the 23.6% band).

Then, draw a diagonal line from the pivot cycle high to the point where the horizontal band intersects an imaginary vertical line extending through the pivot cycle low. These diagonal lines often serve as likely areas of support and resistance. #### Fibonacci Arcs

Like Fibonacci fans, Fibonacci arcs account for both time and price when plotted on a chart. Fibonacci arcs are measured from the pivot point low to the pivot point high (or in reverse). The straight line between the two points establishes the length of the measurement. The radii of the arcs are plotted on that line at distances equal to Fibonacci ratios 23.6%, 38.2%, 50%, 78.6%, etc.

The arcs then act as hypothetical areas of support and resistance. 