What Is Fibonacci Retracement?

[moonchild]

Fibonacci is an Italian that created a mathematical formula that was very famous to the point of being used in Forex.

Fibonacci Retracement, is a tool that comes with the meta trader app and it is used to measure levels like support and resistance in charts.

To use Fibonacci Retracement is very easy, all you have to do is to go your tool menu and scroll down, you'll find the Fibonacci tool and click on it, go to your chart and click and hold, then drag, you'll see some certain lines and levels, demarcated with numbers and different color for each line.

The line are very important to determine the strength of a level, and that's what you'll learn in this post.

You should place the the tool at the beginning of a move and drop the end at the end of a move, then focus on the Retracement

If the Retracement, stops at 32% that means the move is strong, and you can enter the trade and then put your stop loss at the end of the line and then if the retracement went to 61.8% then it is called the sweet spot, it's a good spot to enter too because the impulsive move will be very strong.

 

[Jasz]

Fibonacci retracement is a method of technical analysis for determining support and resistance levels.
The Fibonacci sequence is created by adding the previous two numbers to get the next number, starting with 1 and 0.

Each number in the Fibonacci sequence is approximately 61.8% larger than the previous number (1.618 times larger).
Fibonacci retracement levels are horizontal lines that indicate areas of support or resistance. They can be used in trending markets to identify when a trend might pause or reverse.

To calculate Fibonacci retracement levels, you need to find the most recent significant Swing High and Low on your chart. A Swing High is a candlestick with at least two lower highs on both the left and right of itself. A Swing Low is a candlestick with at least two higher lows on both the left and right of itself.

Once you have found a Swing High and Swing Low, you can calculate your Fibonacci retracement levels by following these steps:
Use the following equation to measure the vertical distance between the Swing High and Swing Low: Vertical Distance = Swing High - Swing Low

Divide this distance by some of the key Fibonacci ratios: 23.6.

 

[Mary Frederick]

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