The Fibonacci Channel is a technical analysis tool that is used to estimate support and resistance levels based on the Fibonacci numbers. It is a variation of the Fibonacci retracement tool, except with the channel the lines run diagonally rather than horizontally.
The tool is used to aid in identifying where support and resistance may develop in the future. If the uptrend is expected to continue, the 100%, 161.8%, and other higher levels are potential price targets. The same concept applies to downtrends if a downtrend is expected to continue
In an uptrend, the zero-line is like a normal trendline, helping to assess the overall trend direction. If the price falls below it, it may need to be adjusted based on more recent price action, or it could signal that the uptrend is over and that the price is breaking lower. Similarly in a downtrend, the zero-line also acts like a trendline. When the price is below it, it helps confirm the downtrend. If the price moves above it, the indicator may need to be redrawn or the price is moving higher out of its downtrend
Difference Between Fibonacci Channels and Andrew's Pitchfork Both these indicators attempt to predict future support and resistance levels based on price levels from the past. Fibonacci channels attempt to do this with percentages of a selected price move. Those percentages are then projected out into the future. Andrew's Pitchfork is simpler in some ways as the angled lines are based on three price levels selected the trader and then extended out into the future.
Another really good guide! We appreciate the way you walk others through your work, step-by-step, by embedding charts and writing out each observation. We've featured this in Editors' Picks so everyone can learn more about Fib Channels.
dgtrd
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I have been honoured, thank you deeply @TradingView 🙏 :)
Auto Pitchfork, Auto Fib Fans and now Auto Fib Channels indicator studies aims to automate and provide the same functionality with the drawing tools TradingView presents to its Users and I aimed the educational posts to be both a guide for the Users who will enjoy using the drawing tools and also as an presentation to indicator version of the same drawing tools
Z3R0-G3N3S1S
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@dgtrd, I am afraid it enables people with no real understanding of the markets or trading knowledge or experience a way to seem like they do to many retail traders looking for free signals. Some of these are just making it too easy but without understanding the concept behind it. Too many have no foundational knowledge but can use things like this to mislead people. Please don't think Ia m being critical it was a great presentation and you explained it well. I am just concerned with all the tools being automated and people just stop trying to learn and blindly follow more then they already do.....
dgtrd
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@Z3R0-G3N3S1S, thanks for commenting much appreciated
I mostly agree with your statements and hence it is one of the reasons for me publishing this and other educational posts togheter with my indicator studies including the automated versions of fib channles, fans, extentions, retracments, pitchfork, linear regression, etc. Educational post links are also included in the description of the indicator studies, strongly suggesting the followers to read them, besides aiming to provide quite detailed description
here is one example comment from users
"It's always a pleasure reading your work, I really enjoy such clear and detailed explanations, thanks for you work and kindness on your sharing"
usually i spend much more time preparing the description than coding an idea, where the description is presenting the concept and how to benefit from the study and i conclude my description with
"Trading success is all about following your own trading strategy and the indicators should fit within your trading strategy, and not to be traded upon solely"
on the other hand, imho automation is inevitable, investment companies benefit from high tech automated tools using artificial intelligence, machine learning , etc and why don't we take advantage of using automated tools
thank you very much @Mayfair_Ventures, i was inspired by your high quality educational posts and aimed to make similar to yours :). Thanks for all of your publications, you are doing a great job