Auto Fibonacci Fan indicator for tradingview

The Auto Fibonacci Fan indicator is a sophisticated and highly useful tool that takes the concept of Fibonacci retracements and projects it into the future as dynamic, angled support and resistance levels.

Based on charts, which specifies levels like 100%, 80.9%, 61.8%, etc., with different line styles (solid, dashed, dotted) and colors, this indicator automates a powerful analytical process. Here’s a detailed breakdown of why it's valuable for trading.

1. It Provides Dynamic Support and Resistance (The Core Advantage)

This is the most significant benefit over standard horizontal Fibonacci retracements.

• What it does: Instead of drawing static horizontal lines, the Fan draws diagonal lines that extend into the future. These lines act as potential support in an uptrend or resistance in a downtrend that change with time.

• Why it's useful: Markets don't move only horizontally; they move in time and price. The Fan accounts for this by providing trend lines that can predict when and where price might find support or resistance as the trend develops. This is far more advanced than simply knowing a price level.

2. It Automatically Identifies the Trend and Its Strength

The angle and spacing of the Fan lines reveal the trend's velocity and health.

• What it does: The indicator automatically calculates the main trend (from a significant low to a high for an uptrend, or vice versa for a downtrend) and plots the fan lines based on that slope.

• Why it's useful:

  • Steep Fan Lines: Indicate a very strong, sharp trend. If price is consistently above the steepest fans, the trend is powerful.

  • Shallow Fan Lines: Indicate a weak or mature trend that may be losing momentum.

  • You can instantly assess the trend's character without manual drawing, saving time and reducing subjective error.

3. It Offers Tiered, High-Probability Reversal Zones

The different colored and styled lines (e.g., solid red, dashed orange, dotted purple) create a hierarchy of importance, much like your file specifies.

• What it does: The indicator plots multiple levels (e.g., 61.8%, 50%, 38.2%). The 38.2% line is often the first and weakest support in an uptrend. The 61.8% line (the "Golden Ratio" line) is typically the most critical. A break below this often signals a potential trend reversal.

• Why it's useful: It provides a structured plan. A pullback to the 38.2% fan might be a minor buying opportunity, while a pullback to the 61.8% fan could be a major one. This helps in sizing positions and managing risk according to the strength of the signal.

4. It Generates Clear Entry and Exit Signals

The interaction between price and the fan lines creates actionable trading signals.

• Entry Signal (in an uptrend): Price pulls back and touches one of the key fan lines (e.g., the 61.8% line) and shows a bullish reversal candlestick pattern (like a hammer or bullish engulfing). This is a potential long entry point.

• Exit / Reversal Signal: A decisive break below a major fan line (especially the 61.8% line) suggests the uptrend is weakening and may be reversing. It's a signal to exit long positions or even consider shorting.

5. It Saves Time and Eliminates Subjectivity

This is the primary advantage of the "Auto" feature.

• What it does: It automatically identifies the most significant high and low within a specified range of bars and draws the fans instantly and accurately.

• Why it's useful: Manually drawing a Fibonacci Fan requires correctly identifying the absolute swing high and low, which can be subjective. Different traders might choose different points. The auto indicator removes this guesswork and bias, ensuring consistency in your analysis. It also saves a tremendous amount of time, especially when scanning multiple charts.

Practical Trading Example (Uptrend)

1. Identification: The Auto Fibonacci Fan indicator draws a set of ascending lines on your chart. The lowest line is likely the 100% level, with the 61.8% and 38.2% lines above it.

2. Pullback: The price, which has been in an uptrend, begins to pull back.

3. Entry: The price declines and touches the 61.8% fan line. As it touches, a bullish hammer candlestick forms. You enter a long position.

4. Stop-Loss: You place your stop-loss order just below the next major fan line (e.g., the 78.6% line).

5. Profit Target: Your initial profit target could be a move back up to the previous high or towards the 38.2% fan line.

6. Trend Failure: If instead of bouncing, the price breaks decisively below the 61.8% line on high volume, it's a strong warning that the uptrend may be over, and you should exit your long trade.

Crucial Limitations and Tips for Use

• Not a Standalone Tool: Like all indicators, the Fibonacci Fan should be used in confluence with other signals. Always look for price action confirmation (candlestick patterns) at the fan lines. Also, align it with other support/resistance levels or moving averages.

• False Breakouts: Price may temporarily spike through a fan line before reversing. Use a close above/below the line (not just an intraday wick) as confirmation.

• Range-Bound Markets: The Fan is most useful in clear, trending markets. It is less effective and can give whipsaw signals in choppy, sideways (ranging) markets.

• Settings Matter: The usefulness depends on the indicator being configured to look at the correct number of bars to find significant swings. The settings in your file (FbFan 100..., FbFan 200...) suggest it's analyzing the last 100 and 200 bars, which is a good practice for multiple timeframes.

Summary: Why the Auto Fibonacci Fan is Useful

In essence, this indicator is useful because it:

1. Automates Analysis: Saves time and removes subjectivity by automatically drawing key levels.

2. Projects Dynamic Levels: Provides moving support/resistance that accounts for both price and time.

3. Gaiges Trend Strength: The angle of the lines offers instant visual feedback on the trend's power.

4. Creates a Trading Plan: Offers clear levels for entries, stop-losses, and warns of potential trend reversals.

It is a powerful evolution of Fibonacci analysis, transforming static numbers into dynamic trend lines that help traders stay on the right side of the market momentum.