A technical Analysis tool used to draw a channel with diagonal Fibonacci retracements. In an uptrend, draw the channel (or return) line by connecting at least two tops. Consequently, draw the basic up trendline through the widest swing (bottom), parallel to the channel line. In a downtrend, draw the channel line by connecting at least two bottoms. Consequently, draw the basic down trendline trough the widest swing (top), parallel to the channel line. Fibonacci retracements equal to 61.8%, 100%, 161.8% and 261.8% of the channel width, are drawn as potential retracement levels. During an uptrend, prices will find support at the diagonal Fibonacci retracements, once they break out below the channel. On the other hand, in the course of a downtrend, prices will find resistance at the diagonal Fibonacci levels, once they break out above the channel.
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