Fibonacci Channel

DEFINITION of 'Fibonacci Channel'

A variation of the Fibonacci retracement pattern in which the trendlines run diagonally rather than horizontally. These channels are used to estimate areas of support and resistance in the same way as the horizontal Fibonacci retracement levels.

BREAKING DOWN 'Fibonacci Channel'

Many traders use the lines drawn by the Fibonacci channel in combination with other support and resistance levels found by other indicators. One common technique is to combine the horizontal Fibonacci retracement levels with the lines established by diagonal Fibonacci channels.