Fibonacci Channels are used to determine fibonacci levels within an identified trend.
These channels can easily be drawn in both uptrends or downtrends to find potential areas where price action could change.
When drawing a Fibonacci Channel on an uptrend, a clearly identified trend needs to be established with higher lows being created.
To draw the channel, first select the two low points on the trend, and then the high point in-between them.
After the channel is drawn, the Fibonacci levels calculated can be used to help speculate price action by watching these areas as support or resistance.
When drawing a Fibonacci Channel on a downtrend, a clearly identified trend needs to be established with lower highs being created.
To draw the channel, first select the two high points determined by the trend, and then the low point in-between them as shown below.
Do you use Fib Channels?
If so, share your ideas in the comments below!
Good info. but just one Q ..how is this different from Trend based Fib Extension tool within Tradingview ...& can either one of them be used to get the same result or this will have a different usage .just trying to understand how both can be used in which situation ? Thanks for your input in advance .