Fibonacci Speed Resistance Fan

The speed resistance fan was developed by Edson Gould, a pioneering technical analyst who used speed lines to measure the rate of change of a price move. The Fibonacci version of the speed fan applies the concept using slopes defined by the ratio of the vertical price move to the horizontal time distance, specifically the 1×1 (45° on arithmetic scale), 2×1 (63.75°), and 3×1 (71.25°) lines.

These lines divide the space between a swing low and high into speed resistance zones. The 1×1 line represents the speed of the original trend — the baseline velocity. The faster 2×1 and 3×1 lines represent accelerating momentum. Conversely, in a downtrend, fan lines below the 1×1 represent deceleration. The tool is used to determine whether a trend is accelerating, decelerating, or reversing at any point in time.

The speed fan differs from the Gann fan in a critical way: Gann's angles are fixed (always 45°, 63.75°, etc. on an arithmetic chart regardless of the market or timeframe), while the speed fan's lines are proportional to the specific price-time ratio of the move. This makes the speed fan adaptive — it automatically scales to the volatility of the current market rather than assuming a fixed relationship between price and time units.

The Fibonacci Speed Resistance Fan is a two-anchor drawing tool. The first click sets theorigin — the anchor point, typically a major swing low. The second click sets theextreme — the endpoint of the swing (swing high for an uptrend, swing low for a downtrend). The vertical and horizontal distances between these two points define the speed ratios.

From these anchors, the tool draws three rays from the origin. The 1×1 line runs from the origin to the extreme point (this is the baseline trend speed). The 2×1 line rises twice as fast (in price per unit time) as the 1×1 line. The 3×1 line rises three times as fast. All lines extend beyond the extreme point, projecting future potential support or resistance at the same velocity ratios. The area between the origin and the lines forms a triangle that visually defines the speed zones.

1. 1
   Click the origin

   Set the anchor at a major swing low (uptrend) or swing high (downtrend). This is the start of the measured price move. The origin must be a clear, structural turning point.
2. 2
   Click the extreme

   The highest point (uptrend) or lowest point (downtrend) of the swing. The tool computes the vertical and horizontal range and draws three speed lines radiating from the origin at 1×1, 2×1, and 3×1 slopes.

The baseline range has vertical component V = |Price₂ − Price₁| and horizontal componentH = Bar₂ − Bar₁ (in bars). The baseline speed is S = V / H (price units per bar). The three speed lines have slopes:

• Price above the 1×1 line in an uptrend indicates a healthy trend. The 1×1 line acts as dynamic support. A break below it with volume warns of weakening momentum and is the first sell signal.
• The 2×1 line acts as resistance in an uptrend (support in a downtrend). When price approaches the 2×1 line, expect a reversal or a significant pause. This is a natural profit-taking zone.
• A break above the 3×1 line signals parabolic momentum — the trend is accelerating at an unsustainable rate. This is often followed by a sharp reversal (a "blow-off top" or "selling climax").
• Speed lines reverse roles after being crossed. A 1×1 line broken in an uptrend becomes resistance on subsequent pullbacks. This role reversal is key for retest entries after a break.
• The area between the 1×1 and 2×1 lines is the "normal acceleration zone" — price in this band is healthy and likely to continue in the trend direction. This is the ideal location for trend-following positions.

1. 1
   Draw speed lines from a major low

   Anchor on a significant low in an uptrend. Confirm the swing high is a clean pivot on the daily chart. The move from low to high should be at least 10 bars.
2. 2
   Buy on a pullback to the 1×1 line

   If price pulls back to the 1×1 line and shows a bullish rejection candle, enter long. Place the stop just below the 1×1 line (0.5–1.0%). This is the simplest speed-line entry.
3. 3
   Take partial profit at the 2×1 line

   The 2×1 line is the first meaningful resistance target. Scale out 1/2 to 2/3 of the position here. Move the remaining stop to breakeven.
4. 4
   Let the remainder run to the 3×1 line

   If momentum accelerates through the 2×1 line, the final target is the 3×1 line. Trail the stop at the 2×1 line. Monitor for exhaustion at 3×1.
5. 5
   Sell if the 1×1 line breaks decisively

   A close below the 1×1 line with increased volume signals trend weakness. Exit longs and consider reversing to a short position targeting the next support level below.

A stock breaks out from a 2-month consolidation range at $50 and rallies to $65 over 10 days. Apply the Speed Fan from the low ($50) to the high ($65). The vertical range is $15 over 10 days = $1.50/day (the 1×1 slope). The 2×1 line has a slope of $3.00/day, and the 3×1 line has $4.50/day.

After reaching $65, the stock pulls back to $57.50 on day 15. The 1×1 line at day 15 is at $50 + 1.50×15 = $72.50. Price is well below this line — a warning sign. On day 20, price reaches $60. The 1×1 line is now at $80. Price is increasingly below equilibrium. This is the first sell signal from the speed fan.

If price cannot reclaim the 1×1 line within another 10 days, the breakout has failed. The speed fan provided an early warning of the failing breakout by day 15 — 5 days before conventional trendline analysis would have signaled the same. This early warning is the key advantage of the speed fan over simple trendlines.

• RSI: When price reaches the 2×1 line and the RSI is above 70, the overbought condition confirms the resistance zone. A double confirmation for a short entry or profit-taking.
• MACD histogram: Decreasing histogram bars as price approaches the 3×1 line suggest momentum is waning at the extreme speed level. This is a warning to take profits before a potential reversal.
• Volume analysis: Declining volume as price approaches a speed line suggests the move is losing steam and the line will hold. Rising volume through a speed line suggests continued acceleration to the next level.
• Moving averages: When the 1×1 speed line aligns with a key moving average (e.g., 20 EMA), the support level is significantly reinforced. The EMA provides "time-based" confirmation of the "velocity-based" speed line.
• Fibonacci retracements: When the 1×1 line coincides with the 38.2% or 50% retracement of a larger swing, the confluence makes the support zone extremely reliable.

The speed fan is computationally straightforward. Its simple geometric construction makes it ideal for automated trend-following systems that need a velocity-based trend filter.

Speed line computation: Given origin (x₀, y₀) and extreme (x₁, y₁), compute V = y₁ − y₀, H = x₁ − x₀. The 1×1 line passes through (x₀, y₀) and (x₁, y₁). The 2×1 line passes through (x₀, y₀) and (x₁, y₀ + 2V). The 3×1 line passes through (x₀, y₀) and (x₁, y₀ + 3V). In slope-intercept form for an uptrend: line_k(x) = y₀ + (k × V / H) × (x − x₀) for k = 1, 2, 3. Each line extends infinitely beyond the extreme point.

Trend velocity monitoring: On each bar, compute the signed distance from price to each speed line. Track the velocity score: +1 for each line price is above (uptrend) or below (downtrend). A score of 3/3 means price is above all lines (strong acceleration). A score of 0/3 means price is below all lines (trend failure). Generate a "reversal watch" alert when the score drops from 3 to 2, a "warning" at 2 to 1, and a "trend change" at 1 to 0. This scoring system transforms the speed fan into a mechanical trend health monitor.

Breakout velocity confirmation: After a consolidation period, apply the speed fan from the breakout origin to measure the breakout's velocity relative to the preceding trend. If the breakout's velocity is greater than 2× the pre-breakout trend velocity (price is above the 2×1 line within 5 bars of breakout), the breakout is genuine. If velocity is below the 1×1 line, the breakout is failing. This velocity confirmation signal can be integrated directly into automated breakout trading systems.

Speed fan trading is velocity-dependent. Risk management must account for the fact that speed lines represent increasing levels of momentum, which can persist longer than expected in strong trends.

Speed zone position sizing: When price is in the "safe zone" (between 1×1 and 2×1 lines), maintain full position size (1.0× base). The trend is healthy and the risk of reversal is moderate. When price enters the "acceleration zone" (between 2×1 and 3×1 lines), reduce to 0.75× base — the trend is extending and a pullback is increasingly likely. When price reaches the "parabolic zone" (above the 3×1 line), reduce to 0.5× base and tighten stops. This tiered system ensures maximum exposure when velocity is sustainable and minimum exposure when velocity is extreme.

Velocity stop placement: In the safe zone (1×1 to 2×1), place the stop 0.5× ATR below the 1×1 line. In the acceleration zone (2×1 to 3×1), place the stop 1× ATR below the 2×1 line — a wider stop acknowledges that the trend is more volatile in this zone and needs more room. In the parabolic zone (above 3×1), place the stop 0.5× ATR below the 3×1 line — a tighter stop because any break below the 3×1 line in a parabolic move signals exhaustion. The zone-adjusted stop accounts for the different volatility characteristics of each speed region.

Velocity divergence exit: A powerful exit signal occurs when price makes a new high but the velocity score drops (e.g., price reaches a new high above the 2×1 line, but the velocity score remains at 2 instead of increasing to 3). This divergence between price and velocity indicates that momentum is waning even as price extends. When velocity divergence is detected, exit 50% of the position and tighten the remaining stop to 0.5× ATR below the 1×1 line.

Speed fan trading challenges the trader's ability to differentiate between sustainable trend velocity and unsustainable parabolic acceleration. The tool provides the framework, but the trader must execute the decisions at each speed zone.

The "velocity euphoria" trap: When price enters the parabolic zone (above 3×1), the excitement of large, fast profits tempts traders to add to positions rather than reduce them. "The trend is accelerating, let's add!" is the thought. This is precisely the wrong response — the parabolic zone is the danger zone. Adding to a position in the 3×1 zone is adding at maximum risk. Follow the system: reduce position size in the parabolic zone, regardless of how exciting the price action seems. The measured approach is the profitable approach.

The "speed line isn't working" trap: When price breaks below the 1×1 line and a trader ignores it because "the trend is still up overall," they are disregarding the speed fan's primary signal. The 1×1 line is not a suggestion — it is the trend's equilibrium velocity. A break below it means the trend's velocity has decreased below the original baseline. Ignoring this signal is the most common cause of losses with the speed fan. Treat the 1×1 break as a mandatory action point, not a discretionary warning.

The speed fan's simple structure can be extended in several ways to address specific market conditions and analytical requirements.

Extended speed ratios: In addition to the standard 1×1, 2×1, and 3×1 lines, some traders add 1×2 (half the baseline speed) and 4×1 (four times baseline) lines. The 1×2 line acts as the "deceleration support" — the line where a slowing trend finds its final support before reversing. The 4×1 line marks extreme parabolic boundaries. Adding both gives a fuller picture of the velocity spectrum from deceleration to extreme acceleration. Use caution: more lines mean more signals, and each additional line may reduce signal quality.

Adaptive speed fan (dynamic baseline): Instead of fixing the baseline to a single origin-to-extreme swing, update the baseline dynamically as the trend extends. Every time price makes a new 20-bar high (in an uptrend), recalculate the speed fan from the original origin to the new extreme. This keeps the speed lines fresh and relevant to the current trend velocity. The dynamic baseline fan is more responsive than the static fan but also more sensitive to noise. Use only on daily or higher timeframes to avoid whipsaw.

A weekly speed fan defines the major trend's velocity. The daily speed fan should confirm the weekly direction. If the weekly 1×1 line is sloping up and the daily speed fan shows price above the daily 1×1 line, all timeframes agree on the uptrend. If they disagree, the longer timeframe dominates.

Velocity alignment: Compare the slope of the 1×1 line across timeframes. If the weekly 1×1 has a slope of $2/day and the daily 1×1 has a slope of $3/day, the short-term trend is accelerating relative to the long-term trend — a bullish sign. If the daily 1×1 slope is below the weekly, the short-term trend is decelerating — a warning sign.

Speed zone analysis: The zone between 1×1 and 2×1 on the weekly chart is the "safe zone" for long-term positions. The zone between 2×1 and 3×1 on the weekly chart is the "danger zone" — overextended and vulnerable to reversal. Use the daily speed fan to fine-tune entries within these weekly zones. Enter when the daily fan says "oversold" (near daily 1×1) and the weekly fan says "safe zone" (between weekly 1×1 and 2×1).

Speed fans measure velocity, making them directly tied to the market's momentum regime. Different momentum conditions produce different speed line behavior.

Accelerating momentum (rising Aroon, rising MACD): Price holds above the 1×1 line and pushes toward the 2×1 line. The 2×1 line provides temporary resistance but is eventually broken. The 3×1 line becomes the primary resistance. This is the ideal regime for the speed fan — it is capturing the market's accelerating velocity accurately.

Decelerating momentum (falling Aroon, MACD divergence): Price loses the 2×1 line first, then falls below the 1×1 line. The 1×2 line becomes the next support. Sequential angle breaks confirm deceleration. The speed fan provides early warning by showing the trend is slowing before price reverses. Each deceleration to a shallower angle is a reduction warning.

Parabolic / climax (vertical price move): Price exceeds the 3×1 line and approaches or exceeds the 4×1 line. This is unsustainable. The speed fan's 3×1 line acts as the "fuse" — if price holds above the 3×1 line for more than 3–5 bars, a violent reversal is imminent. Parabolic speed moves resolve with 50–80% retracements of the entire parabolic move.

• 1.Fibonacci Speed Resistance Fan — Investopedia
• 2.Fibonacci Speed Fan — TradingView Help
• 3.Fibonacci Analysis — Constance Brown (2008)
• 4.Technical Analysis of Financial Markets — John J. Murphy (1999)
• 5.New Trading Systems and Methods — Perry J. Kaufman (2013)