Forex Fibonacci Trading
When studying technical analysis many traders come across a variety of methods for determining support and resistance. One of the most used methods for finding these pricing levels includes Fibonacci retracements.
The Fibonacci retracements are measured by finding the distance between the daily high and the low . Traditionally traders look for price to move towards
the 23.6%, 38.2%, 50%, 61.8% and 78.6% levels for trading.
It is important to remember that Fibonacci retracements can be used on a variety of charts as well as time frames. Once retracement levels are found, these technical points lend themselves to potentially trade a swing back in the direction of the primary trend. Traders can place entries near the Fibonacci retracements themselves, but more often than not Fibonnacci retracements can be used in conjuncture with other technical indicators.
Below we can see Fibonacci retracements at work. The Fibonacci retracements are measured by finding the distance between the daily high and the low. Traditionally traders look for price to move towards the 23.6%, 38.2%, 50%, 61.8% and 78.6% levels for trading. Currently in our example, price has retraced as much as 61.8% of our initial decline. Traders are watching this level for resistance can then move to employ the strategy of their choosing.
Finally Fibonacci retracements can be useful in a breakout scenario. If prices continue to break out to higher highs, this is an implication that prices may be reverting against the direction of the prior move.
By the way, all Forex brokers, will always have a Fibonacci tool available within their trading platforms. Many traders ask how to install
a Fibonacci indicator/tool. You do not need any installations, since every single trading platform has Fibonacci tool pre-installed.
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