Technical indicators are mathematical calculations that help us to forecast the markets direction. These differ from other analysis as they are only supportive tools behind Dow theory and price patterns. There are mainly two types of technical indicators, Moving average and Relative strength index.
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Hi sir,
This will be the appropriate answer for the question Fibonacci Series & Fibonacci retracement
What is the logic behind golden Mean – Fibonacci Series?:
Fibonacci series is the sequence of numbers in which each number is the sum of the previous two numbers in the sequence.
Fibonacci Series is 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144,………….
Golden Mean is 1.618 Logic behind golden mean is the ratio of two consecutive numbers in fibonacci series is same for all the two consecutive numbers.
Example 1: 21/13=1.618 Example 2: 144/89=1.618
How do we use Fibonacci retracement to identify support and resistance zone?:
Fibonacci Retracements are ratios used to identify potential reversal levels. These ratios are found in the Fibonacci sequence.
The most popular Fibonacci Retracements ratios are
1. 61.8% – dividing one number in the series by the number that follows it. For example: 8/13 = 0.6153
2. 38.2% – ratio is found by dividing one number in the series by the number that is found two places to the right.
3. 23.6% ratio is found by dividing one number in the series by the number that is three places to the right.
To identify support and resistance zones:
For bearish reversal trend Draw Horizontal Fib retracement lines from the bottom & top and considered to be 100% & 0% respectively. if the price reverses to 23.6% then there is support and if it breaks 23.6% then 38.2% & 50% are considered as other support zones.