Categories: Fibonacci Analysis

The Essential Guide to Fibonacci Trading: A Comprehensive Introduction

The foundation of lies in a remarkable mathematical sequence discovered by Leonardo Fibonacci in the 13th century. This sequence – 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144 – holds special significance in , particularly in and prediction.

The Magic Behind When dividing any number in the sequence by the next number, the ratio approaches 0.618 after the first few numbers. This 61.8% level, known as the “,” appears frequently in nature and has become a cornerstone of technical trading. Other key Fibonacci ratios used in trading include:

  • 23.6% – Minor retracement level
  • 38.2% – Important support/resistance zone
  • 50% – Major psychological level (not technically Fibonacci)
  • 61.8% – Golden ratio, strongest support/resistance
  • 78.6% – Deep retracement level

Application in Professional traders implement Fibonacci tools across multiple timeframes and markets, including:

The versatility of Fibonacci analysis makes it valuable for:

  1. Identifying potential reversal points
  2. Setting profit targets
  3. Determining stop-loss levels
  4. Confirming trend strength
  5. Finding high-probability trade entries

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