Educational guide on using Fibonacci method. Free Forex Fibonacci tutorial
Forex Fibonacci Book. Series of Free Forex ebooksEducational guide on using Fibonacci method in Forex
By Jeff Boyd
If to measure the ratio of any number to one of the next higher number the result will be 0.618. For example, 21/34=0.618.
If to measure the ratio between alternate numbers we will get 0.382. For example, 13/34 = 0.382.
These proportions can be found in nature, science, architecture, music, art. A few examples of Fibonacci numbers are pine cones, sunflowers, pineapples, palm trees, spider webs, snail shells, DNA molecules and millions of other things in the universe.
When applied on Forex charts, Fibonacci Retracement Levels are used as support and resistance levels: 0.236, 0.382, 0.500, 0.618, 0.764.
Fibonacci Extension Levels are used as targets for taking profit: 0.382, 0.500, 0.618, 1.000, 1.382, 1.500, 1.618.
Fibonacci retracement and extension levels carry important information for experienced as well as novice Forex traders as they help to identify entry and exit points during the trade.
This chapter will introduce traders to basic rules of applying Fibonacci method in Forex.
And now let's get straight to the point. Where and how to use Fibonacci study on Forex charts?
As you have noticed, there are some A, B, C, D points on the chart. They represent the highest spikes of the price moves or simply highest price swings. To apply Fibonacci study to the price moves we will always look for those points.
How about a small assignment?..
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