This artcile will be about Fibonacci . How to use it and what Fibonacci actually are.
Basically Fibonacci is a sequence of numbers that traders use to predict support and resistance zones.
What is a Fibonacci Retracement and how to use it
A Fibonacci retracement is a term used in technical analysis that refers to areas of support or resistance . Fibonacci retracement levels use horizontal lines to indicate where possible support and resistance levels are. Each level is associated with a percentage. The percentage is how much of a prior move the price has retraced. The Fibonacci retracement levels are 23.6%, 38.2%, 61.8% and 78.6%. While not officially a Fibonacci ratio, 50% is also used.
How to Use Fibonacci Retracement.
First you need to find swing high. Swing high is simply the highest point where market rolls over or you can find lowest point before market rallies.
When you draw you Fibonacci Retracement on the left side you will see Fibonacci levels(23.6%, 38.2%, 50% ,61.8%,78.6%).
There are few Fibonacci levels that are going to be more intresting than others, that would be 38,2%, 50%(huge level, the most intresting one) and 61,8% level which is not a Fibonacci number according to mathematical equation but it's something that's been used long enough and traders.
How it looks like, and pay attention to the chart and levels.
We can see that on 0.5 Fibonacci Retracement level the market started selling of again, like on 0.6 level. On 0.3 level we also can see buying opportunity. So you can use these levels as a guidelines.
The main questtion Should you trade solely on Fibbonacci?
No, but if you use Fibbonacci with other indicators like stoch or macd or support and ressistance zones, then YES. Use Fibbonacci as your guidelines.