Fibonacci Levels are very often used in trading for support and resistance. Traders belive that Fibonacci levels work in trading because so many traders use them that they function as a self fulfilling prophecy... Market in fact responds to the them so you should incorporate it in to your trading too...
Fibonacci numbers are a sequence of numbers beginning with 1, and then each subsequent number is the sum of the previous two.
The sum of each equation is a Fibonacci number in the sequence 1,2,3,5,8,13, and so on.
In trading Fibonacci ratios are commonly used, and the most important one is the Golden Reatio, which is diverted by noticing that each # in the Fibonacci sequence is approximately 1.618 x greater than the preceding # . Something like...
8/5 = 1.6
13/8 = 1.625
21/13 = 1.615
34/21 = 1.619
This Golden Ratio can be found in nature...in items like tree branches veins in leaves etc.... pretty cool huh?
So how do we apply Fibonacci levels to our trades?
The Golden Ratio is the primary but not only used in trading. The other common ratios used are...
0
23.6
38.2
50 (not a Fib ratio but used by traders)
61.8
76.4
100
We use these ratios as % that the market retraces against the trend, generally as levels at where they consider entering a trade in direction of the trend.
To use your Fibonacci tool in your trading software (tradingview.com or coinigy.com - free software) start with the most significant high, and then drag the tool to your significant low (or vice versa)
(as you can see 38.2 level shows you support)
Fibonacci retracement ratios are common price levels at whitch the market stops retracting against the trend and continue back in the direction of the trend... the tool draws horizontal lines across the chart, indicating the price levels where the market will have retraced 23.6%, 38.2%, 50%, 61.8%, 76.4% or 100% of the price move from the high to the low you used for your Fibonacci tool.
Please refer to your software manual for details on how to use the tool on your charts...
I hope you find this post useful for your next trade and as always....Happy Trading!!!
This post received a 4.1% upvote from @randowhale thanks to @krypto101! For more information, click here!
This was a pretty good one too! I can tell that I will enjoy reading your posts. Again, do you utilize this tool personally when making trades, or is it just something you're interested in from a finance perspective?
-AzB
They are utilized on my charts all the time, i use tradingview as software, even free version allows u to insert 3 indicators...coinigy is pretty good too for cryptos
I find fibonacci algos to be very intriguing. Where did you learn to use these tools? Did you teach yourself?
yes i learned by my self with the help of Youtube :) Im in crypto since 2015 so it all came with time.
check out YT channel of Josh Olszewski , he uses all of those indicators
Another cool indicator is Ichimoku Cloud...Ill make a quick post on that as well
Sounds pretty cool! Which exchange do you use? I just switched from Poloniex to Bittrex, personally. It kind of seemed like Poloniex was failing. A lot of their wallets are malfunctioning and they don't have a very wide breadth of tokens to choose from.
What are your thoughts?
Fibonacci is one of the most important tools used by traders. Thank for posting this!
U welcome, more coming soon
This post has received a 1.00 % upvote from @booster thanks to: @krypto101.
Source: https://books.google.com/books?id=yXXCBwAAQBAJ&pg=PA118&lpg=PA118&dq=Fibonacci+Levels+are+very+often+used+in+trading+for+support+and+resistance.+Traders+believe+that+Fibonacci+levels+work+in+trading+because+so+many+traders+use+them+that+they+function+as+a+self+fulfilling+prophecy...+Market+in+fact+responds+to+the+them+so+you+should+incorporate+it+in+to+your+trading+too...&source=bl&ots=-XG1yJCLEI&sig=iuKSQ4759jAwx9N1wmk8IFUJ-c0&hl=en&sa=X&ved=0ahUKEwijxfS0pvHUAhWGZj4KHc4XBsMQ6AEIKzAA#v=onepage&q=Fibonacci%20Levels%20are%20very%20often%20used%20in%20trading%20for%20support%20and%20resistance.%20Traders%20believe%20that%20Fibonacci%20levels%20work%20in%20trading%20because%20so%20many%20traders%20use%20them%20that%20they%20function%20as%20a%20self%20fulfilling%20prophecy...%20Market%20in%20fact%20responds%20to%20the%20them%20so%20you%20should%20incorporate%20it%20in%20to%20your%20trading%20too...&f=false
Not indicating that the content you copy/paste is not your original work could be seen as plagiarism.
Some tips to share content and add value:
Repeated plagiarized posts are considered spam. Spam is discouraged by the community, and may result in action from the cheetah bot.
Creative Commons: If you are posting content under a Creative Commons license, please attribute and link according to the specific license. If you are posting content under CC0 or Public Domain please consider noting that at the end of your post.
If you are actually the original author, please do reply to let us know!
Thank You!