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Trading and Investment Terminology

Fibonacci Arcs

Fibonacci arcs are concentrical circles plotted at the endpoint of the trendline their radii are based on Fibonacci ratios

 

After the uptrend, these circles might signify support zones, while after the downtrend, they might indicate the resistance zones.

 

Fibonacci Arcs are built as follows: first, the trend line is drawn between two extreme points, for example, from the trough to the opposing peak. 

 

Then three arcs are built having their centers in the second extreme point and intersecting the trend line at Fibonacci levels of 38.2, 50, and 61.8 percent.

 

Fibonacci Arcs are percentage arcs based on the distance between major price highs and price lows. 

Therefore, with a major high, major low distance of 100 units, the 31.8% Fibonacci Arc would be a 31.8 unit semi-circle.

 

The next number in the sequence is found by adding the previous two numbers. To see it in action, consider this sequence of Fibonacci Numbers:

1,1,2,3,5,8,13,21,34,55,89,144,233,377,610,987,1597

 

 

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