How to use Fibonacci retracements
How to use Fibonacci retracements
Fibonacci retracement levels are horizontal lines that indicate the possible support and resistance levels where price could potentially reverse direction.
The idea is to go long (or buy) on a retracement at a Fibonacci support level when the market is trending up.
Fibonacci retracement levels are considered a predictive technical indicator since they attempt to identify where price may be in the future.
The theory is that after price begins a new trend direction, the price will retrace or return partway back to a previous price level before resuming in the direction of its trend.
Finding Fibonacci Retracement Levels
Then, for downtrends, click on the Swing High and drag the cursor to the most recent Swing Low.
Because of all the people who use the Fibonacci tool, the Fibonacci levels become self-fulfilling support and resistance.
One thing you should take note of is that price won’t always bounce from these levels. They should be looked at as areas of interest. We’ll teach you more about that later on.
For now, there’s something you should always remember about using the Fibonacci tool and it’s that they are not always simple to use!
If they were that simple, traders would always place their orders at Fibonacci retracement levels and the markets would trend forever.
