marym
Active member
Fibonacci is a technical analysis tool that is widely used by traders in the forex market. It is based on the mathematical principles discovered by the Italian mathematician Leonardo Fibonacci, who identified a series of numbers that occur frequently in nature and in financial markets. This series of numbers is known as the Fibonacci sequence, and it is derived by adding the two previous numbers in the sequence together.
In forex trading, the Fibonacci tool is used to identify key levels of support and resistance, as well as to determine potential entry and exit points for trades. This is achieved by plotting horizontal lines at specific Fibonacci levels, which are calculated by dividing the vertical distance between two points on a price chart by the key Fibonacci ratios of 23.6%, 38.2%, 50%, 61.8%, and 100%.
Traders use Fibonacci retracements to identify potential areas of support and resistance. When the price of a currency pair retraces from a previous high or low, it may be expected to find support or resistance at the key Fibonacci levels. Traders may use these levels to enter or exit trades, or to set stop-loss orders to limit potential losses.
In addition to Fibonacci retracements, traders may also use Fibonacci extensions to identify potential areas of support and resistance beyond the current price level. Fibonacci extensions are calculated by projecting the key Fibonacci ratios beyond the most recent high or low, and can be used to identify potential price targets for trades.
Overall, Fibonacci is a powerful tool for traders in the forex market. It can help to identify key levels of support and resistance, as well as to determine potential entry and exit points for trades. However, it should be used in conjunction with other technical analysis tools and fundamental analysis to develop a comprehensive trading strategy.
In forex trading, the Fibonacci tool is used to identify key levels of support and resistance, as well as to determine potential entry and exit points for trades. This is achieved by plotting horizontal lines at specific Fibonacci levels, which are calculated by dividing the vertical distance between two points on a price chart by the key Fibonacci ratios of 23.6%, 38.2%, 50%, 61.8%, and 100%.
Traders use Fibonacci retracements to identify potential areas of support and resistance. When the price of a currency pair retraces from a previous high or low, it may be expected to find support or resistance at the key Fibonacci levels. Traders may use these levels to enter or exit trades, or to set stop-loss orders to limit potential losses.
In addition to Fibonacci retracements, traders may also use Fibonacci extensions to identify potential areas of support and resistance beyond the current price level. Fibonacci extensions are calculated by projecting the key Fibonacci ratios beyond the most recent high or low, and can be used to identify potential price targets for trades.
Overall, Fibonacci is a powerful tool for traders in the forex market. It can help to identify key levels of support and resistance, as well as to determine potential entry and exit points for trades. However, it should be used in conjunction with other technical analysis tools and fundamental analysis to develop a comprehensive trading strategy.