Fibonacci channels serve as a methodology for predicting support and resistance levels in a given market. They utilize the identification of peak and valley formations in the market to make informed projections about major changes in trend directions. The key to effectively utilizing Fibonacci channels is correctly identifying the relevant peaks and valleys to work with. Once the appropriate tops and bottoms have been identified, support and resistance lines can be projected into future weeks and months. It is important to consider only significant tops and bottoms as the base line for a channel, incorporating one or more prominent side swings. The widest swing within the time frame of the base line is used as a trigger line.
