The Fan Trendline Strategy is a powerful, structure-based trading method that uses a series of diverging or converging trendlines—known as trendline fans—to identify support and resistance zones, potential trend reversals, and momentum accelerations. Unlike single trendline strategies, fan trendlines reveal market geometry and rhythm, helping traders navigate price behaviour across different stages of a trend.

This strategy is ideal for swing and intraday traders who prefer clean, visual setups built on price action, trend psychology, and time-tested charting techniques.

What Is a Fan Trendline?

A trendline fan consists of two or more trendlines drawn from the same anchor point, each with a different angle. These lines:

• Represent different phases or speed of the trend
• Create zones of influence that act as dynamic support/resistance
• Help traders visualise whether price is accelerating, stabilising, or reversing

The more times price respects the lines in the fan, the more valid and actionable the setup becomes.

Strategy Objective

• Identify multi-phase trend progression using fan lines
• Trade pullbacks or breakouts based on price’s interaction with each line
• Combine with market structure and candlestick confirmation for optimal entries

Step-by-Step Strategy Guide

Step 1: Identify the Anchor Point

Choose a major swing high or swing low on the chart (Daily, H4, or H1).

• This is the origin of all trendlines in your fan
• Often corresponds with a major reversal or liquidity spike

Step 2: Draw the Fan Trendlines

From the anchor point, draw:

• Trendline 1 (shallow): To the first significant higher low (in uptrend) or lower high (in downtrend)
• Trendline 2 (medium slope): To the next pullback point
• Trendline 3 (steep): To the most recent acceleration leg

You now have a trendline fan showing different stages of momentum.

Step 3: Wait for Price to Approach a Fan Line

• If price is above the fan, you’re in a strong uptrend
• If price is respecting one of the fan lines repeatedly, it becomes your control zone
• If price breaks below a fan line, it may indicate trend weakening or reversal

Step 4: Enter on Reaction or Breakout

Buy Scenarios:

• Price pulls back to a fan trendline in an uptrend
• You see a bullish engulfing, hammer, or break-of-structure
• Enter long near the fan line

Sell Scenarios:

• Price rallies into a fan trendline in a downtrend
• Forms bearish rejection candle or lower high
• Enter short on confirmation

Breakout Setup:

• Price breaks below the final fan line
• Retests underside and fails
• Enter in direction of the breakout for trend reversal

Stop Loss and Take Profit Rules

• Stop Loss:
  • Just beyond the fan line or recent swing high/low
  • Adjusted to match candle volatility (e.g. ATR-based buffer)
• Take Profit:
  • Next fan line or major structure level
  • Optional trailing stop with EMA or price swing logic

Example: GBP/USD Fan Reversal Setup

• Anchor low at 1.2550
• Trendline 1 to 1.2620
• Trendline 2 to 1.2685
• Trendline 3 to 1.2740

Price breaks below Trendline 3 and retests it with bearish pin bar
Entry: 1.2735
Stop Loss: 1.2755
Take Profit: 1.2650
Reward-to-risk: 4:1

Best Conditions for the Fan Trendline Strategy

• Clean trending environments
• Pullback entries after strong legs
• Reversal patterns following trendline fan break
• Pairs with strong technical behaviour (e.g. EUR/USD, USD/JPY, NAS100)

Advantages of the Strategy

• Easy to use, clean visual structure
• Adaptable to trend, continuation, and reversal scenarios
• Filters noise with dynamic S&R levels
• Works on all timeframes and instruments
• Builds a map of the trend’s strength and exhaustion zones

Common Mistakes to Avoid

• Drawing forced or arbitrary trendlines
• Ignoring price action confirmation at each fan level
• Using fan lines in low-volume or choppy markets
• Trading into news events or wide spreads without protection

Conclusion

The Fan Trendline Strategy helps traders understand and visualise the changing dynamics of a trend. By analysing how price reacts to a series of trendlines from a single origin, you gain insight into momentum shifts, potential breakouts, and re-entry zones.

To master this strategy and learn how to combine it with institutional confluence models, sign up for our elite Trading Courses and gain the structure, clarity, and execution skill used by top-performing traders.