Forex trading with Fibonacci method 📈 Mini-lesson on how to use Fibonacci
Fibonacci method in Forex
Straight to the point:Fibonacci Retracement Levels are:
0.382, 0.500, 0.618 — three the most important levels
Fibonacci retracement levels are used as support and resistance levels.
Fibonacci Extension Levels are:
So, what we will learn today is how to apply Fibonacci tool and how to interpret results that we see on the screen.
How to install Fibonacci indicator/tool?You don't need any installations, since every single trading platform has Fibonacci tool pre-installed.
All Forex brokers have Fibonacci tool available within their trading platforms.
To set up Fibonacci on the chart we need to find out:
So, click on Fibonacci tool from trading platform that you use. Now, as shown on the Figure 1:
We have an uptrend. A — our lowest swing, B — our highest swing. So, we will look to BUY some lots at the good lowest price and go up with the trend.
Click on A and drag your cursor to B, click. There you go! You must see different lines appeared on your chart. Those lines are called Fibonacci Retracement and Extension Levels.
So, what we are expecting is next: the price should retrace (go down) from point B to some point C, and then continue up in the direction of the trend.
The best situation would be to buy at the lowest level — 0.618 — point C. And on practice the price usually gives us this chance. However, 0.500 is also a good level to place a BUY order.
Well, let's take a look at the progress.
The price has successfully reached the lowest 0.618 point and made a U-turn.
Important note: in this Fibonacci tutorial 0.618 extension level (as well as 1.000, 1.618 levels) are calculated in relation to the point B, which means that B point represents a 0% extension.
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