Fibonacci Trading: An Overview



The Fibonacci retracement levels to be eyed are: 23.6%, 38.2%, 50.0%, 61.8%, and 76.4%. Moreover, the following are the levels that appear to hold the most weight: 38.2%, 50.0%, and 61.8% levels. It is usually set as the default settings in forex charting software. If your trading tools don’t have a Fib tool, a Fibonacci calculator can be found on the internet where it can generate levels that require minimal information from you.

Forex traders consider Fibonacci retracement levels to serve as a potential support and resistance areas. With the fact that most traders are eyeing on these levels, the support and the resistance levels appeal to become a self-fulfilling prophecy.

Alike to retracement levels, the extension levels of the key Fibonacci are: 38.2%, 50.0%, 61.8%, along with the extensions of the 100%, 138.2% and 161.8%.

In order to aim for profit targets, traders utilized the Fibonacci extension levels to function as a potential support and resistance areas. As mentioned earlier, the levels can show up as the end of the trend due to the self-fulfilling expectations as tons of forex traders are eyeing these levels and are placing buy and sell orders.

For you to be able to apply Fibonacci levels on your charts, a better understanding of Swing High and Swing Low points is needed first.

A candlestick with a two lower highs on both left and right of itself is called a Swing High.

A candlestick with a two higher lows on both left and right itself is called a Swing Low.

A bigger opportunity to trade successfully arise when Fibonacci tools is used along with other support and resistance levels, trend lines, and patterns of candlesticks that tracks entry and stop loss points.

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