Fibonacci level

Fibonacci level

Fibonacci level
John Dou - 09/02/2020


The market price tends to the levels — and this is understandable because it is at the levels where the accumulation of market orders is located. Therefore, there are several techniques for predicting these levels, from simple p / s to the extremely popular Fibonacci numbers that are found on literally every 3M chart.

Sharefounders review will tell you about a huge number of trading systems based on them, however, all of them can be divided into two topics: corrections (replacements) and extensions.

Leonardo Fibonacci is an ancient Italian cupcake that discovered a simple numerical sequence. This sequence, as it turned out, is found everywhere and is universal for many natural phenomena. It looks like this: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144... the Sequence starts with 0, then 1, then 0 + 1 = 1, the third number. The second and third numbers of the sequence (1 +1) = 2 and the fourth number are added to it. To it is added a third and went-went.

The Fibonacci sequence is the sum of the previous two numbers. Next, a curious proportion is determined based on two numbers. If the first number in the sequence is divided by the second — the next in the row-you get 0.618. For example, if 55 is divided by 89 or 21 is divided by 34. Always, the same proportion, with rounding up.

Always 0.618.

If you divide the numbers by one, you will always get 0.382. For example, a 13 / 34 or 34 / 89 = 0.382.

Magic and shamanism of numbers. These fractions are considered the so-called "Golden ratio" and it is found everywhere in nature. They especially like to show spirals as an example, how sunflower seeds are stacked, and so on.

A sort of universal fraction. Sharefounders review offers to get right to the point so that these fractions do not waste time for a long time. Fibonacci's replacement levels look like this: 0.236, 0.382, 0.500, 0.618, 0.764 the Fibonacci extension Levels are as follows: 0, 0.382, 0.618, 1.000, 1.382, 1.618 the Good news is that you don't have to count fractions. Not only are their calculators, but they are drawn automatically on a live chat.

Why do we need levels based on their fractions?

Do many traders believe that if the seeds in a sunflower go in a spiral, the distance between the branches of which is calculated by these fractions, why not use the replacement levels as support or resistance? That's how traders use them. These levels are also used for opening trades or placing stops in Forex. But the extension levels are used in Forex to set orders like "take profit". In other words, in their opinion, the price often reaches these levels, which should be taken into account when analyzing.

Sharefounders review suggests taking the daily AUD/USD chart and stretching the grid between two swings. The main task is to wait until the price determines the level of support from one of the Fibonacci replacements. It looks like this. In this case, the pullback occurred from the 0.382 level after the price broke through the first correction level of 0.236.

Fibonacci is trending down.

We act in the same way, stretching the grid between two candle patterns-swings, but already down. EUR/USD chart, 4-hour TF. The calculation is that once the price rolls up, it will face one of the Fibonacci resistance levels since the overall downward trend is very strong. Let's see what happened next. Indeed, there was a pullback, the market slowed down below the level of 0.382 – an early hint of the exhaustion of the forces of the bulls.

Fibonacci levels and the trend line.

Another way to use Fibonacci is with another basic technical analysis tool. And what kind of tool do we have after support and resistance? Right-trend lines. It is in the uptrend and downtrend that many traders use Fibonacci correction levels, so combining them with trend lines is what the doctor ordered. Let's look at the following chart. As you can see, the currency pair is in an upward movement, the trend line is beautiful and unambiguous. You need to buy when the price touches the trend line again. Sharefounders review advises adding Fibonacci correction levels and seeing what happens. And you will get a more accurate entry zone. We use two swing values and observe what is happening. We are particularly interested in the 0.500 and 0.618 levels. We will rely on them as good levels of support.

Similarly, you can use Fibonacci levels with horizontal support and resistance. In this case, Fibonacci will act as another way to filter inputs at p/s levels.

Sharefounders review will review the three most important levels of Fibonacci correction, these are: 0.382 (38.2%) 0.5 (50.0%) 0.618 (61.8%). All other levels, 0.236 or 0.764 are auxiliary. These are important levels of expansion: 1.00 (100%) 1.382 (138.2%) 1.618 (161.8%). Using Fibonacci is not difficult. Swings (upper and lower) are taken as the maximum and minimum price values. A grid is drawn from them, and its lines are used as hints of support and resistance levels.

Sharefounders review summarizes the results.

As we remember, the more traders use a certain tool, the more important they are. And Fibonacci is a very popular tool, which often skips on the charts of professional traders.

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