In forex trading, the Fibonacci sequence can also be applied to market behavior to find high-probability trading setups on a wide range of timeframes. Fibonacci retracement is based on the idea that markets will retrace a predictable portion of a move, after which they will continue to move in the original direction. Fibonacci retracement is created by taking two extreme points on a chart and dividing the vertical distance by the key Fibonacci ratios. 0.0% is considered to be the start of the retracement, while 100.0% is a complete reversal to the original part of the move. Once these levels are identified, horizontal lines are drawn and used to identify possible support and resistance levels
The following is a list of key Fibonacci retracement levels to look out for:
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The following is a list of key Fibonacci retracement levels to look out for:
- Retracement level: 38.2% Fast and aggressive pullback bounce.
Retracement level: 50% Medium pullback bounce.
Retracement level: 61.8% Golden Number pullback bounce.
Retracement level: 78.6% Stop-loss level to be placed, 10 PIPs.
Extension levels: -61.8% and -27% Target area for trend continuation.
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No part of this book may be reproduced or used in any manner without written permission of the copyright owners except for the use of quotations in a book review.
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