A moving average fan is a set of different lengths of moving averages placed on the same chart.
Ideally this is composed of a set of widely followed moving averages which provide support and resistance.A very strong new trend for instance on my set of moving averages, stays on one side of the 8 period simple moving average, then as it weakens or gets more mature and the buying (or selling in a bearish trend) weakens it loses this as a support/resistance line.
Then it often goes to the next higher moving average and may once again often resume the original trend. This continues often in the set of moving averages that I use: 8,20,50, 89, 144 and sometimes 200. Visually this seems to show a fan spreading out at the beginning of a strong trend and contracting again as it weakens. As a trend reverses the fan has usually been pushed back together and reverses direction and once again opens up, with the moving averages each been violated as previous trend supports.
So as a new trend is established the 144 period or 200 period moving average is now below the price and acting as support. An aggressive trade on this may be to counter trend trade each of the moderately long moving averages once violated, in hopes of getting a better entry. Be aware however that the trend is usually effectively in place until the longer moving averages act as support.
You could picture this as a fan opening and closing, or as STEPS, each more significant in relationship to the trend continuing or a reversal occurring.
