Fib Retracement - better/important than most believe
Fibonacci.
introduced by Italian mathematician "father of the Fibonacci sequence" Leonardo Da Pasa (born around A.D. 1170) in 1202 in his book Liber Abaci "book of calculations" which he handwrote as the printing was not yet invented, which also became the first book to be introduced to the Hindu-Arabic numeral system as it was a new way to write numbers and do calculations.
Fibonacci in trading.
the most important/popular fib tool in the trading/investing community is the Fibonacci Retracement applied from the Fibonacci sequence which is a set of steadily increasing numbers where each number is the sum of the preceding 2 numbers.
Fibonacci retracement, is derived based on high and low price/ valley and peak in supply and demand terms.
The most important Fibonacci ratios/percentage of the retracement measure is - 23.6%, 38.2%, 50%, 61.8%, 100%, with the ratio/percentage being represented by horizontal lines on the price chart.
calculated by :
in bull market, high price - (high price-low price) x percentage
in bear market, low price + (high price-low price) x percentage
Significance of Fib Retracement.
these are very important too traders as the indicate significant price levels/areas like :
- support and resistance
- liquidity pool - using rectangle drawing tool to connect two fib retracement levels together as a zone not a singular ratio level. based on current market conditions and trading criteria.
- price targets, exit price (Take Profit)
- Stop Loss
- stop and limit orders (set and forget for supply and demand traders)
Fibonacci retracement also compliments other trading tool and indicators well and can be used by all sorts of traders, from position traders to scalpers. it works best on trending market conditions to identify reversals, corrections, pullbacks continuation moves.
important note :
- Leonardo did not invent Fibonacci, it was actually used and known to Indian mathematicians since the 6th century.
- the 50% is not really a Fibonacci number instead is taken from Dow theory that assets usually retrace half their prior move.
put together by : Pako Phutietsile as @currencynerd
introduced by Italian mathematician "father of the Fibonacci sequence" Leonardo Da Pasa (born around A.D. 1170) in 1202 in his book Liber Abaci "book of calculations" which he handwrote as the printing was not yet invented, which also became the first book to be introduced to the Hindu-Arabic numeral system as it was a new way to write numbers and do calculations.
Fibonacci in trading.
the most important/popular fib tool in the trading/investing community is the Fibonacci Retracement applied from the Fibonacci sequence which is a set of steadily increasing numbers where each number is the sum of the preceding 2 numbers.
Fibonacci retracement, is derived based on high and low price/ valley and peak in supply and demand terms.
The most important Fibonacci ratios/percentage of the retracement measure is - 23.6%, 38.2%, 50%, 61.8%, 100%, with the ratio/percentage being represented by horizontal lines on the price chart.
calculated by :
in bull market, high price - (high price-low price) x percentage
in bear market, low price + (high price-low price) x percentage
Significance of Fib Retracement.
these are very important too traders as the indicate significant price levels/areas like :
- support and resistance
- liquidity pool - using rectangle drawing tool to connect two fib retracement levels together as a zone not a singular ratio level. based on current market conditions and trading criteria.
- price targets, exit price (Take Profit)
- Stop Loss
- stop and limit orders (set and forget for supply and demand traders)
Fibonacci retracement also compliments other trading tool and indicators well and can be used by all sorts of traders, from position traders to scalpers. it works best on trending market conditions to identify reversals, corrections, pullbacks continuation moves.
important note :
- Leonardo did not invent Fibonacci, it was actually used and known to Indian mathematicians since the 6th century.
- the 50% is not really a Fibonacci number instead is taken from Dow theory that assets usually retrace half their prior move.
put together by : Pako Phutietsile as @currencynerd
