Fibonacci Arcs
Fibonacci Arcs are created on a chart by first drawing a trendline between two extreme points, a trough and opposing peak. Three arcs are generated that are centered on the second extreme point and intersect the trendline at Fibonacci Levels, usually of 38.2%, 50% and 61.8% of the distance between a price maximum and minimum. The interpretation of Fibonacci Arcs involves looking for support and resistance as prices approach the arcs. Fibonacci Arcs and Fibonacci Fan Lines are sometimes used together to anticipate support and resistance at the points where the Fibonacci studies intersect. See also: Fibonacci Fan Lines
Related Articles: Trading with Fibonacci Numbers
Chart courtesy of Prophet Financial Systems (www.prophet.net)