How to Draw Fibonacci Channels
Fibonacci Channels are used to determine fibonacci support and resistance 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.
Uptrend
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.
Downtrend
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!
