Fibonacci tools utilize special ratios that naturally occur in nature to help predict points of support or resistance. Fibonacci numbers are 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, etc. The main ratio used is . Fibonacci Retracements Fibonacci trading sequence for forex the most heavily used Fibonacci tool is the Fibonacci Retracement.
To calculate the Fibonacci Retracement levels, a significant low to a significant high should be found. P 500 is a broad measure of human nature, thus the Fibonacci sequence should apply very well. Nevertheless, the Fibonacci sequence is applied to individual stocks, commodities, and forex currency pairs quite regularly. The chart above shows the 38. P 500, that price rallied to the 23.
After breaking resistance a few months later, the 23. There are many other Fibonacci tools available to stock, forex, or futures traders. The information above is for informational and entertainment purposes only and does not constitute trading advice or a solicitation to buy or sell any stock, option, future, commodity, or forex product. Past performance is not necessarily an indication of future performance.
In this case, price retraced approximately 38. In finance, Fibonacci retracement is a method of technical analysis for determining support and resistance levels. Fibonacci retracement is a popular tool that technical traders use to help identify strategic places for transactions, stop losses or target prices to help traders get in at a good price. Unlike moving averages, Fibonacci retracement levels are static prices. This allows quick and simple identification and allows traders and investors to react when price levels are tested. Because these levels are inflection points, traders expect some type of price action, either a break or a rejection.