Leonardo Fibonacci was an Italian mathematician (1170-1250). He described a numerical system which is generated by a sequence of numbers later knew Fibonacci numbers. In the Fibonacci sequence each number is the sum of the previous two numbers and starting with 0, 1.
So the sequence begins at 0,1,1,2,3,5,8,13,21,34,55,89,144,233,377,610,978.......
Higher up in the sequence the closer two consecutive Fibonacci numbers of the sequence divided by each other all will approach the ratio approximately 1:1.618 or 0.618:1.
You will find some other Fibonacci level these are called Fibonacci extension. They are 0,0.382,0.618,1.000,1.382,1.618........
Fibonacci retracement: In the Forex market traders use Fibonacci retracement in order guess where the market may be going and where may market move turn on trending. To do so you have to find out where swing high price and swing low price then drag Fibonacci retracement and watch carefully. Normally 50% retracement follows but there is not guarantee 50% retracement, the market can break 50% to high level it is just a potential guess of market movement.
Remember the following facts:
*Fibonacci is used for potential trade movement.
*Fibonacci uses for potential temporary support and resistance level.
*When Fibonacci level broke market will be usually go the next level.
*When market break Fibonacci level 0 and 100 big movement may happen.
*Look at this level with candlestick confirmation such as Doji, engulful, pin bar, etc. This will be improve your trading performance.
*Use minimum 4 Hours time frame for Fibonacci tools. However short frame can be used.
So the sequence begins at 0,1,1,2,3,5,8,13,21,34,55,89,144,233,377,610,978.......
Higher up in the sequence the closer two consecutive Fibonacci numbers of the sequence divided by each other all will approach the ratio approximately 1:1.618 or 0.618:1.
You will find some other Fibonacci level these are called Fibonacci extension. They are 0,0.382,0.618,1.000,1.382,1.618........
Fibonacci retracement: In the Forex market traders use Fibonacci retracement in order guess where the market may be going and where may market move turn on trending. To do so you have to find out where swing high price and swing low price then drag Fibonacci retracement and watch carefully. Normally 50% retracement follows but there is not guarantee 50% retracement, the market can break 50% to high level it is just a potential guess of market movement.
Remember the following facts:
*Fibonacci is used for potential trade movement.
*Fibonacci uses for potential temporary support and resistance level.
*When Fibonacci level broke market will be usually go the next level.
*When market break Fibonacci level 0 and 100 big movement may happen.
*Look at this level with candlestick confirmation such as Doji, engulful, pin bar, etc. This will be improve your trading performance.
*Use minimum 4 Hours time frame for Fibonacci tools. However short frame can be used.
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