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Fibonacci retracement

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Fibonacci retracement

Fibonacci retracements are a method of technical analysis for determining support and resistance levels. They are

named after their use of the Fibonacci sequence.

Fibonacci retracement is based on the idea that markets will

retrace a predictable portion of a move, after which they will continue to move in the original direction.

Fibonacci retracement is created by taking two extreme points on a chart and dividing the vertical distance by

the key Fibonacci ratios. 0.0% is considered to be the start of the retracement, while 100.0% is a complete reversal to the original part of the move. Once these levels are identified, horizontal lines are drawn and used to identify possible support and resistance levels

Fibonacci retracement

Fibonacci ratios:

Fibonacci ratios are mathematical relationships, expressed as ratios, derived from the Fibonacci sequence. The key Fibonacci ratios are 0%, 23.6%, 38.2%, 50%, 61.8% and 100%.

Fibonacci retracement

Fibonacci retracement

The key Fibonacci ratio of 0.618 is derived by dividing any number in the sequence by the number that immediately follows it. For example, 8/13 is approximately 0.6154, and 55/89 is approximately 0.6180.

 

Fibonacci retracement

The 0.382 ratios is found by dividing any number in the sequence by the number that is found two places to the right. For example, 34/89 is approximately 0.3820.

 

Fibonacci retracement

The key Fibonacci ratio of 0.618 is derived by dividing any number in the sequence by the number that immediately follows it. For example, 8/13 is approximately 0.6154, and 55/89 is approximately 0.6180.

 

 

 


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