2. Fibonacci Retracement
Fibonacci retracement is a very popular tool among
technical trader.
Identified by mathematician Leonardo Fibonacci in
the thirteenth century.
Fibonacci Retracements are ratios used to identify
potential reversal levels.
3. Factors Affect on Price Movement
The two basic approaches to analyzing the Forex market
are Fundamental Analysis and Technical Analysis.
Fundamental Analysis :
Economic
Social/Political
Geopolitical forces
4. Technical Analysis
Technical analysis is a security analysis methodology
for forecasting the direction of prices through the
study of past market data.
Technical analysis is done by using some indicator like
Moving Averages, RSI , Stochastic Oscillator ,
Bollinger Bands , Fibonacci Retracement….etc
5. Technical Analysis
Technical indicators look to predict the future price
levels.
The info about trend.
Support and resistance.
6. Fibonacci Retracement
It used to identify possible support and resistance
levels.
These levels are created by drawing a trend line between
two extreme points and then dividing the vertical
distance by the key Fibonacci ratios of 23.6%, 38.2%, 50%,
61.8% and 100%.
7. Calculation of Fibonacci Ratio
The Fibonacci sequence of numbers is as follows: 0, 1,
1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, etc. Each term in this
sequence is simply the sum of the two preceding terms
and sequence continues infinitely.
The 23.6% ratio is found by dividing one number in
the series by the number that is three places to the
right.
For example: 8/34 = 0.2352.
8. The 38.2% ratio is found by dividing one number in
the series by the number that is found two places to
the right.
For example: 55/144 = 0.3819.
The Fibonacci ratio 61.8% - also referred to as "the
golden ratio" is found by dividing one number in the
series by the number that follows it.
For example: 8/13 = 0.6153, and 55/89 = 0.6179.
9.
10. A number divided by the previous number
approximates 1.618.
For example: 21/13=1.6153, 34/21=1.6190.
Addition ratios many traders also like using the 50%
and 78.6% levels. The 50% retracement level is not
really a Fibonacci ratio.
11. Retracement
A retracement is a temporary reversal in the
direction of a price that goes against the
prevailing trend.
12. Use
Fibonacci retracements are often used as part of a
trend Trading strategy.
traders using this strategy take that price has a high
probability of bouncing from the Fibonacci levels back
in the direction of the initial trend.
13. •The 38% level is a good place to enter a short
position for buy or sell as per trend
14. •Fibonacci 100% level can be used by traders to project
areas that make good potential exits for their trades in
the direction of the trend.
15. Limitation
Don't Fibonacci reference points in Gap up/down
.it's always good to keep your reference points
consistent.
Use in long Timeframe. A Fibonacci retracement
applied on a short-term time frame can give the trader
a false impression.
If it use in short time frame its a trap.
16. Don't rely on Fibonacci alone. Fibonacci can
provide reliable trade setups, but not without
confirmation so Apply additional technical tools like
RSI or stochastic oscillators will support the trade
opportunity and increase the possibility of a good
trade.
Don't apply on running candle.
Use Fibonacci Proper Way. put it left high/low to
right low/high
