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Fibonacci Forex Indicator Explanation

Fibonacci Forex Indicator Explanation

As most of you know that the Forex market in general is moving in waves and there will be times when the market is running and there will also be a time when the market retraces.

One of the best tools you can use this time and continuing violation of Forex Fibonacci levels.

Fibonacci is a good forex tool that can help you to predict the price movement. If you are able to use it effectively, So what exactly is Fibonacci?

It is a large number of sequences that is named after Leonardo of Pisa and Fibonacci number sequence goes like this

0, 1, 1, 2, 3, 5, 8, 13 and so on. (Add first 2 numbers to get the next)

Still in the trade, we are not interested in sequences, we are actually interested in the relationship that Fibonacci sequences are created.

Fibonacci Retracement - Fibonacci Retracements are displayed by selecting two extreme points on a forex chart, These are the ratio that we use as a currency trader.

Below is a list of violation ratios

- 0.236
- 0.382
- 0500
- 0.618
- 0.764

Below are the extension ratios

- 1.272
- 1.382
- 1,500
- 1.618

So how can you use these rates in trading?

Fibonacci ratio is actually used as a level of support and resistance. These are areas where you buy or sell depending on what you see and where you are.

Although there are a number of speeds given above, the significance 0.382, 0.500, 0.618 and they are usually areas of strong support when the price retraces down and the area of ​​strong resistance when the price retraces up.

Here is how to plot your Fibonacci levels in uptrend

Step 1: Using the tool provided by your platform, choose a high point and low point

Step 2: Select the level you want to display. (We will select 0.382, 0.500, 0.618, 1.272, 1.382, 1.500 and 1.618)

If you are in a downtrend, you have to do is turn up 1 point.

Uptrend Fibonacci

Downtrend Fibonacci

In case you are in uptrend, you will find that a violation of your cost will usually land at .382, .500 or .618 level because they are areas of strong support and price, then expand to continue uptrend movement.

If you ever find the price moves below the .382 level, there is a high chance that this trend is reversed.

In case you are in a downtrend, the market will retrace up and also will find its resistance to 0.382, 0.500 and 0.618 levels. Similarly uptrend, if the market retraces over .382 level, there is a high chance that the market is reversed.

Fibonacci support and resistance

In my next blog post, I will show you how to trade using Fibonacci strategy and how to use the 1.272, 1.382 and 1.618 levels. In the meantime, you should try to plot the Fibonacci levels on your chart to see the power of it.

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