Fibonacci Fan

A Fibonacci fan draws a trendline from the start of a swing and then extra diagonals that pass through the Fibonacci retracement prices of that swing, usually at the right-hand anchor. The result is a set of rays. As time moves on, each ray sits at a different price. The 38.2, 50, and 61.8 rays are the ones usually kept. A pullback in a rising fan is watched where price meets a rising ray. The fan is a bundle of speed lines. It says the trend is intact if pullbacks hold the shallower rays, and that it is weakening if price drops through to the steeper ones. It is still a drawing. The angles depend on how you scale the chart.

Draw the fan on a clear impulse, from the low to the high in an uptrend. The rays fan down from the high or up from the low, depending on the platform's construction. Read them from shallow to deep. A hold of the first ray is a strong, fast trend. A break of the last ray means this swing's fan is done and you should be looking at structure, not at a deeper ray you add after the fact. Recalculate the fan when a new impulse replaces the old one. A fan from a swing that has been fully retraced is a souvenir.

In an uptrend, a pullback that holds a rising fan ray and turns up with the trend is the bullish use. Prefer a ray that also meets a horizontal level or a moving average. The ray alone is a diagonal of a ratio, and diagonals are easier to overfit than horizontals because a small change in anchor moves the price at the right edge by a lot.

A rally into a falling fan ray, drawn on a decline, is the bearish mirror. A break up through the whole fan is information that the decline you measured is no longer controlling the slope. Do not keep selling the 61.8 ray after price has reclaimed the start of the fan.

Treating the fan as independent of a retracement grid drawn on the same swing. At the right-hand anchor the rays pass through those exact prices. You have one measurement. Also ignoring the scale problem. A fan that looks perfect on a stretched chart is a different set of prices on a square chart.

Fans inherit the Fibonacci retracement's lack of a causal basis and add a dependence on the time axis. They are a visual of slope. A simple trendline you could defend bar by bar is usually the more honest diagonal. Use the fan if it organises the chart. Drop it if you are hunting for a touch.