Fibonacci channel
A trendline with parallel lines above it at Fibonacci fractions of a chosen width.
What it shows
A Fibonacci channel starts with a trendline and a second point that sets the width. Parallel lines are drawn at 38.2%, 61.8%, 100% and 161.8% of that width.
It is a way to mark several possible resistance lines in a trend. The extra lines are conventions.
How we find it
The same code that draws it on your chart follows these steps, with the same result every time.
- Draw a trendline through two swing lows.
- Set the width as the distance to the farthest swing high between them.
- Draw parallel lines at 38.2%, 61.8%, 100% and 161.8% of that width above the base line.
- Extend to the right.
Starting values: Levels 38.2, 61.8, 100, 161.8%; Base line through two swing lows. These are proposed and will be tuned on real price data before launch.
How to read it
- The base line is in cyan with a darker tone.
- The 100% line is the usual channel top.
- Lines above 100% show where price would be if it kept going.
Status labels you may see
| Label | What it means |
|---|---|
| Below 38.2% | In the lower part of the channel. |
| Between 38.2% and 100% | In the main part. |
| Above 100% | Above the usual top of the channel. |
What cancels it
A close below the base line.
What traders check next
- Which of the lines price turned near.
- Whether the base line has more than two touches.
- Whether the slope changes on a different period.
Limits
- The width depends on one swing high.
- Lines other than the base and the 100% line are conventions.
- Many lines make coincidences easy.
Try it in forecastviz
- Open any ticker and choose Fibonacci and harmonic patterns → Fibonacci channel in the left menu.
- Switch between 6M, 1Y, 3Y to see how the picture changes.
- Compare with Parallel channel from pivots and Ascending channel on the same chart.
Questions
How is it different from a parallel channel?
A parallel channel has two lines. A Fibonacci channel adds interior and outer lines.
Does it work on falling trends?
Yes, mirrored.
Related trends
Further reading
- Boroden, Fibonacci Trading
- Carney, Harmonic Trading
- Murphy, Technical Analysis of the Financial Markets
Educational only. Not financial advice, and not a price forecast. Charts are drawn by code from past price data, which may be delayed.