Trading CFDs involves a significant risk of loss that may not be suitable for all investors. Please ensure you fully understand the risks and take appropriate care to manage your exposure.

Trading CFDs involves a significant risk of loss that may not be suitable for all investors. Please ensure you fully understand the risks and take appropriate care to manage your exposure.

Fibonacci Retracement Tool in trading

Majority of technical traders have used Fibonacci retracement at one point or another in their trading. This tool originated way back in the thirteenth century and was fronted by Leonardo Fibonacci, a popular mathematician back then.He pointed a set of numbers and specific mathematical relationships in the form of ratios and series which were essential in technical analysis. Some of the numbers in this sequence are: 0,1,1,2,3,5,8,13,21,34,55,89,144…whereas the key ratios are 23.6%, 38.2%, 50%, 61.8% and 100%Typically, for one to create a Fibonacci retracement, you start by identifying two extreme points on the stock chart. These two points should ideally be a significant peak and trough.After identifying the two points, your next step is to divide the vertical distance using the Fibonacci ratios (aforementioned). After each level is marked on the vertical axis, the next step is drawing horizontal lines. These horizontal lines are used to point out any support and resistance levels.The support levels are areas where the price has stopped going lower whereas the resistance levels are areas where the prices have stopped going higher. Fibonaci Retracement Image 1

The Fibonacci number Series

This article is available only to alvexo plus members, register now, and get 7 days of free membership.

Don’t have an account? Sign up

Please insert full name
Invalid email
Please insert valid password

I hereby agree to the privacy policy and to be contacted and receive Alvexo marketing emails, SMS or phone calls. as well as open a free trading account on the alvexo platform

Already have an account? Log in

+

This website uses cookies to ensure best possible user experience. Read more

Accept