Online Trading Blog

  • Weekly Stock Market Insights.
  • Trading Strategies, Products & Info
  • Indicators, Candlesticks & Patterns
  • Be a Subscriber be a Happy Trader
  • Click here to Explore the sitemap.

 

Thursday, July 24, 2008

Fibonacci Channels Technical Indicator

Fibonacci channels are an advanced Fibonacci technical indicator helpful in determining support and resistance levels. They are variations of Fibonacci retracement lines, and are drawn diagonally rather than horizontally. Fibonacci channels can be applied to both long-term and short-term trends, and to up trends and downtrends.


Many modern trading systems allow traders to draw Fibonacci channels over price charts. First a base channel is created connecting a significant price top and price bottom. Then the first slopping line is created by connecting two tops (in an uptrend) or two bottoms (in a downtrend). Then parallel lines are drawn above or below this line at key Fibonacci levels of 23.6%, 38.2%, 50% and 61.8% of the original base channel width (done automatically by the trading system). Traders can also extend the levels to beyond 100% (161.8%, 200%, 261.8%, etc) if there is significant trends.

Interpreting Fibonacci channels is just like horizontal Fibonacci retracements. When one line is crossed in an uptrend it becomes support and above line becomes resistance. Similarly when one diagonal channel line is crossed in a downtrend it becomes resistance and below line becomes support. Most traders use Fibonacci channels with Fibonacci retirements and the price levels when they cross are given significant importance.

NobleTrading.com Offers Online Stock Trading, Online Options Trading
Online Futures Trading, Online Forex Trading
Worldwide Brokerage Service, Day Trading Brokerage

Privacy Statement | Margin Disclosure | Risk Disclosure | Business Continuity Plan | Site Map | Order routing Disclosure Penson | Blog

The risks involved with online trading can be financially substantial. Online trading system delays or market volatility may adversely affect online trading related services. Not all securities, services or products are available in all countries or U.S. states. Please consider whether online trading is compatible with your financial resources and individual circumstances. Online trading in extended hours entails additional risks such as lower trading liquidity, higher volatility, more rapidly changing prices, wider spreads, and the like. Nothing herein should be deemed as an offer or solicitation of securities trading, products or services in any jurisdiction in which online trading brokerage services are not properly licensed. SIPC insurance does not apply to futures or forex business.

Brokerage Services provided by Lightspeed Trading LLC, Member finra/sipc/nfa
Copyright NobleTrading.com ®, Inc, a division of Lightspeed Financial, Inc, 2011. All rights reserved.