ETH is banging off a Fibonacci Level.
And here's what we need to remember about the 1.618 level that ETh just rejected.
1.618, also known as the Golden Ratio, holds special significance.
Here's why:
Mathematical Relationship: The Golden Ratio is an irrational number roughly equal to 1.6180339887. It is found by dividing a number in the Fibonacci sequence by the one two places to its right (e.g., 13 divided by 8). This ratio appears frequently in nature and geometry, leading some to believe it possesses inherent "harmony" or balance.
Fibonacci Retracement Levels: These levels are calculated by applying the Golden Ratio and other related ratios (e.g., 0.618, 0.382) to a significant price move on a chart, identifying potential retracement points for the price.
Psychological Significance: Some traders believe that investors subconsciously recognize the Golden Ratio and react to prices approaching these levels, creating support or resistance. While there's no definitive proof, its historical use might lead to a self-fulfilling prophecy.
Empirical Backing: Studies have shown some statistically significant evidence for the effectiveness of Fibonacci retracement levels, particularly around the 38.2% and 61.8% levels. However, the results have yet to be consistently strong, and the method faces criticism for subjectivity in drawing the levels and lack of a robust theoretical foundation.
Important to remember:
Fibonacci levels are not magic formulas and shouldn't be used alone for trading decisions. Combining them with other technical indicators and fundamental analysis is crucial.
Their effectiveness is debated, and their success likely depends on market psychology and investor behavior, which can be unpredictable.
And here's what we need to remember about the 1.618 level that ETh just rejected.
1.618, also known as the Golden Ratio, holds special significance.
Here's why:
Mathematical Relationship: The Golden Ratio is an irrational number roughly equal to 1.6180339887. It is found by dividing a number in the Fibonacci sequence by the one two places to its right (e.g., 13 divided by 8). This ratio appears frequently in nature and geometry, leading some to believe it possesses inherent "harmony" or balance.
Fibonacci Retracement Levels: These levels are calculated by applying the Golden Ratio and other related ratios (e.g., 0.618, 0.382) to a significant price move on a chart, identifying potential retracement points for the price.
Psychological Significance: Some traders believe that investors subconsciously recognize the Golden Ratio and react to prices approaching these levels, creating support or resistance. While there's no definitive proof, its historical use might lead to a self-fulfilling prophecy.
Empirical Backing: Studies have shown some statistically significant evidence for the effectiveness of Fibonacci retracement levels, particularly around the 38.2% and 61.8% levels. However, the results have yet to be consistently strong, and the method faces criticism for subjectivity in drawing the levels and lack of a robust theoretical foundation.
Important to remember:
Fibonacci levels are not magic formulas and shouldn't be used alone for trading decisions. Combining them with other technical indicators and fundamental analysis is crucial.
Their effectiveness is debated, and their success likely depends on market psychology and investor behavior, which can be unpredictable.