Fibonacci Retracement - Fibonacci Retracement Overview
Fibonaccy retracements are a favorite of forex traders that utilize technical analysis to see areas of support and resistance in financial markets. It is very generally used by most technical traders in their forex trading strategy.
Fibonacci retracements have Leonardo Fibonacci to thank for the series of numbers the tool uses. Retracements are formed when the trader picks a high and low price point on the charts that are divided by a few ratios. The 23.6%, 38.2%, 50%, 61.8% and 100% ratios are utilized.
The ratio lines are there as the tool is dragged from on point to another. These ratios are then looked to as areas of support and resistance. When pushed for an explanation to why this is so, most do not have an answer. As such, fibonacci retracements are always referred to by technical traders before entering a trade.
Stock traders, forex traders, futures and commodities traders commonly make utilize of this tool often. Fibonacci confluence is a strategy that was created by some traders looking to make fibonacci retracement more effective. Fibonacci confluence is done by using two or more fibonacci retracements on the same financial instrument. Multiple retracements are plotted from the same starting point while they end at different areas of resistance.
Points which have many ratios drawn across are considered to be strong levels of support and resistance. These areas are typically marked for reference during trading.
It is not recommended to utilize fibonacci retracements on their own. They are utilized in conjunction with other forex indicators to improve their rate of success. Fibonacci retracements have proven to be useful if used in this manner. - 23218
Fibonacci retracements have Leonardo Fibonacci to thank for the series of numbers the tool uses. Retracements are formed when the trader picks a high and low price point on the charts that are divided by a few ratios. The 23.6%, 38.2%, 50%, 61.8% and 100% ratios are utilized.
The ratio lines are there as the tool is dragged from on point to another. These ratios are then looked to as areas of support and resistance. When pushed for an explanation to why this is so, most do not have an answer. As such, fibonacci retracements are always referred to by technical traders before entering a trade.
Stock traders, forex traders, futures and commodities traders commonly make utilize of this tool often. Fibonacci confluence is a strategy that was created by some traders looking to make fibonacci retracement more effective. Fibonacci confluence is done by using two or more fibonacci retracements on the same financial instrument. Multiple retracements are plotted from the same starting point while they end at different areas of resistance.
Points which have many ratios drawn across are considered to be strong levels of support and resistance. These areas are typically marked for reference during trading.
It is not recommended to utilize fibonacci retracements on their own. They are utilized in conjunction with other forex indicators to improve their rate of success. Fibonacci retracements have proven to be useful if used in this manner. - 23218
About the Author:
Link for a guide on fibonacci retracement as well as extra universally employed indicators at www.i-forex-trading.com.
posted by X - Men @ 5:28 AM
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