Forex Fibonacci Trading


If you are studying technical analysis you will come across a lot of methods for detecting support and resistance. One of the usually used techniques for finding these pricing levels includes Fibonacci retracements. 

 

These Fibonacci retracements are measured by finding the range between the daily high and the low. Conventionally Forex traders search for the market price to move towards the 23.6%, 38.2%, 50%, 61.8% and 78.6% levels for trading.

 

It is significant to remember that Fibonacci retracements can be used on a lot of charts and also timeframes. When retracement levels are found, these technical spots lend themselves to potentially trade a swing back in the direction of the main trend. You can take trades near the Fibonacci retracements themselves but in most cases not Fibonnacci retracements can be used in conjuncture with other technical indicators.

 

Below you can see Fibonacci retracements at work. Currently in the example the market price has retraced as much as 61.8% of the initial decline. 

Finally Fibonacci retracements can be a useful tool for a breakout scenario. If the market price continues to break out to higher highs, this is a sign that the price can maybe falling back against the direction of the prior move.

 

Besides the most Forex brokers have a Fibonacci tool available within their trading platforms. A lot of traders ask how to install a Fibonacci indicator or a tool. You do not need any installations because normally every trading platform has a Fibonacci tool pre-installed.

 

In the following video you can get some more information about Forex Fibonacci Trading.