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Fibonacci Retracements are ratios used to identify potential reversal levels. These ratios are found in the Fibonacci sequence. The most popular Fibonacci Retracements are 61.8% and 38.2%. Note that 38.2% is often rounded to 38% and 61.8 is rounded to 62%. After an advance, chartists apply Fibonacci ratios to define retracement levels and forecast the extent of a correction or pullback. Fibonacci Retracements can also be applied after a decline to forecast the length of a counter trend bounce. These retracements can be combined with other indicators and price patterns to create an overall strategy.
Fibonacci retracement use horizontal lines to indicate the areas of support zone and resistance zone. Most popular Fibonacci retracemnets are 62% and 38%.
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 61.8% and 38.2% and 23.6%.
calculation of fibonacci retracements in fibonacci series
0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233
The 61.8% ratio is found by dividing one number in the series by the number that follows it. For example: 8/13 = 0.6153, and 55/89 = 0.6179.
The 38.2% ratio is found by dividing one number in the series by the number that is found two places to the right. For example: 55/144 = 0.3819.
The 23.6% ratio is found by dividing one number in the series by the number that is three places to the right. For example: 8/34 = 0.2352.
using these ratios
for bullish trend
when a horizontal lines is drawn with the bottom & top it is considered to be 0% & 100% respectively.
the possible resistance zones are 23.6% 38.2% 61.8%
if the price goes above 23.6% then there is support the resistance zones can be 38.2% & 61.8% likewise resistance zone is considered
for bearish trend
when a horizontal lines is drawn with the bottom & top it is considered to be 100% & 0% respectively.
the possible support zones are 61.8% 38.2% 23.6%
if the price goes below 61.8% then there is resistance the support zones are 38.2% & 23.6% likewise support zone is considered
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