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.

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RELATED FAQS
  1. How do I use Fibonacci Retracements to create a forex trading strategy?

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  2. Why is the Fibonacci Retracement important for traders and analysts?

    Find out why traders and analysts in financial markets use Fibonacci retracement to help identify support and resistance ... Read Answer >>
  3. What is Fibonacci retracement, and where do its ratios come from?

    A Fibonacci retracement is a popular tool that can be used to identify support and resistance levels, and place stop-loss ... Read Answer >>
  4. What are the most common strategies to place retracement levels?

    Find out how traders place Fibonacci retracement levels, and learn what it means when a price retracement seems to reverse ... Read Answer >>
  5. What are the best technical indicators to complement Fibonacci Retracements?

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