Fibonacci retracements are a form of technical analysis used by traders to predict future potential prices in the financial markets. If used correctly, can help traders to identify support and resistance levels based on past price action.
fiboancci, also known as leonardo bonacci, was born in Italy (Pisa), he became famous for being a mathematical genius.
THE GENIUS : FIBONACCI SEQUENCE AND THE GOLDEN SECTION
1-In 1202 he wrote the Liber Abaci, the book reported a numbering from 0 to 9 and the positional notation.Liber Abaci has shown practical use in commercial accounting (coomercialbook keping), interest calculations, weights, measures, money changing and other applications.
In the fibonacci sequence each number is the sum of the two previous numbers starting from 0 and 1, all this is found in nature.
2-The golden section is a figuative representation of the golden number, which would be 1.6180339887.
by convention the value of the number is assimilated into 1.618.
The concept of the golden section returns in many natural elements and also in many works of art.
TRADING WITH FIBONACCI RETRACEMENTS : THE MOST USED TECHNIQUE
Charting software has simplified the process of drawing Fibonacci lines.Fibonacci retracement lines can be created when you divide the vertical distance between the high and low points. Horizontal lines are drawn on the trading chart at the 23.6%, 38.2% ,61.8% and 76.4% retracement levels. Some traders use the 50.0% ratio.
1-In an upward trend, you can select the Fibonacci line tool, select the low price and then the high price. The indicator will mark key ratios such as 61.8%, 50.0% and 38.2% on the chart ,then to get an assumed price prediction you can move the lowest point to the right . Similarly, in a downward trend, you can select the Fibonacci line tool, choose the high price and drag the cursor down to the low price. A pullback will most likely happen at the Fibonacci retracement levels of 23.6%, 38.2%, 61.8%, or 76.4%. Pullback is also possible at 50%.
2-When trending is up or down, it usually pulls back slightly before continuing the trend. Often, it will retrace to a key Fibonacci retracement level such as 38.2% or 61.8%. Below these levels, unless there are a couple of green/red candles to confirming reverse trading(whether you use it for bearish or bullish forecasts)then it will go with the flow
TIME IS EVERYTHING
if you want you can use a longer timeline so as to be more precise with the forecast (24 / 48h-1week etc ..), but you can also use it in a short time.
Nothing in this material is /or should be considered to be financial, investment or other advice on which reliance should be placed. The material is for general information purposes only.