How to use Fibo levels in trading?

Hi guys, as I promised, this post is about Fibonacci Levels for YOU!🧡
Many newbies on the market, and I'm sure this post can be helpful, so must be repeated 💪

Leonardo Fibonacci is a great mathematician who lived in the XI century. The scientist deduced a number of natural numbers, which later began to bear his name.

Each number in the series was the sum of the two previous numbers: 1 + 1 = 2; 1 + 2 = 3; 2 + 3 = 5 etc.
The result is a series of numbers: 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, etc.

Fibonacci numbers have some properties:

📌Division of any number of the series into the subsequent tends to 0.618 (the golden ratio in ancient Greek and ancient Egyptian cultures);
📌dividing any number of the series by the next + 1 tends to 0.382;
📌dividing the subsequent number of the series by the previous one tends to 1.618;
📌division of the number of the series by the second number preceding it tends to 2.618.

Fibonacci numbers are often used not only in technical analysis , but also in physics, astronomy and other disciplines.💪🏻

Fibonacci levels are a tool that sets horizontal support and resistance levels on the price chart based on price movement.


It's important to understand, that Fibo levels work well when there is a trend in the market.

How to determine Fibonacci levels?

To determine Fibonacci levels, you need to find the recent significant high and low of the last price movement. When plotting levels for a downtrend, the first point should be at the maximum and the second at the minimum. For an uptrend, you need to do the opposite. Click on the low of the price swing and drag the cursor to the high. In this case, the construction of levels always occurs from left to right.


How to trade by Fibonacci levels?

The basic variant with an upward movement: we determined the minimum and maximum, set the levels, waited for a rollback, entered the market. The price continues to move - we drag the levels to a new maximum, wait for our rollback level, and enter the market.
In a downward movement, we do the same, entering a movement on a pullback.

The technical analysis usually uses the number 0.618 or 61.8%, 0.382 or 38.2%, as well as the psychological half (middle) of 50%.

✔ Very often, based on these coefficients in the technical analysis of the market, Fibonacci lines, Fibonacci levels and Fibonacci periods are built.

Fibonacci lines are built relative to significant highs / lows and represent support or resistance lines, from which they make a purchase or sale.

Fibonacci numbers - the magic of numbers that works in trading and in everyday life .

💥You can simply draw arbitrary horizontal lines on the chart, and ... oh that's mystic... they will also be worked out both in the past and in the future.💥

We can make some conclusions:

🔵Fibonacci tool draws support and resistance lines on the chart based on price movement;
🔵the Fibonacci tool is always applied on the price chart from left to right, both in the case of long positions in an uptrend, and in the case of short positions in a downtrend;
🔵the levels marked between the beginning and the end of the price movement are correction levels, they show which levels the price is likely to return to;
🔵the most common Fibonacci retracement levels are 38.2%, 50% and 61.8%, they are often used to enter the market;
🔵there are two ways to use correction levels to enter the market: aggressive (entry at each of the levels) and passive (waiting for the price to correct in the originally observed direction);
🔵It's important to note that Fibonacci levels are not a trading system, they are an additional tool that only suggests possible correction levels; it should be used only in combination with a trading system or as part of a trading system.


I hope everything was clear for You, and You found this post as helpful🙏🏻
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