Fibonacci Fan Tool
In comparison to other Fibonacci charting tools, the Fibonacci Fan Tool is one of the easier Fibonacci charting tools to use and place on a stock chart. While I use the other Fibonacci charting tools (Fibonacci Extension and Retracement Tools) for multi-purposes, I typically use the Fibonacci Fan Tool for one purpose only:
- The Fibonacci Fan Tool assists me with purchasing shares by providing zones or "quadrants" that can be used as part of a scale-in share purchase strategy.
And while the Fibonacci Fan Tool can help you scale into a position on a hot, upwards trending stock chart, I prefer to use them on longer-term charts.
When a Fibonacci Fan Tool is used on a longer-term chart, like a weekly or monthly candlestick chart, it provides investors with value opportunities by identifying value buying zones (quadrants).
Learning the components of the Fibonacci Fan Tool will help with determining the appropriate scale-in strategy based on your type of overall investing strategy. So let's start with the various components of a Fibonacci Fan Tool:
- 2 Anchor Points - Anchor Points are used to place the Fibonacci Fan Tool on a stock chart.
- 3 Trendlines - All of the Trendlines are automatically calculated and drawn after the 2 Anchor Points have been placed on the stock chart. The automatically calculated and drawn Trendlines result in the development of 2 Quadrants:
- An Upper Quadrant
- A Lower Quadrant
- An Upper Quadrant
The 3 Trendlines, the Upper Quadrant and the Lower Quadrant (as well as breaks below the Lower Quadrant) can all be used at different times during a stock's uptrend as places to purchase shares.
Just like all other Fibonacci Charting Tools, the Fibonacci Fan Tool can be used on candlestick charts covering different lengths of time such as 5 minute charts, hourly charts, daily charts, weekly and even monthly charts.
When share prices are trending upwards and.......If you want to continue learning about things like:
- the components of a Fibonacci Fan Tool
- how to use the tool to monitor pullbacks and calculate purchase areas
- advanced techniques, like how to trade using a Fibonacci Fan Tool
- tips and warnings when using this tool
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