The levels used in Fibonacci retracements in the context of trading are not numbers in the sequence, rather they are derived from mathematical relationships between numbers in the sequence.
Fibonacci retracement levels are depicted by taking high and low points on a chart and marking the key Fibonacci ratios of 23.6%, 38.2%, 61.8% horizontally to produce a grid. These horizontal lines are used to identify possible price reversal points.
How do you use Fibonacci retracement?
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.
What is Fibonacci retracement in forex?
In Forex trading, Fibonacci retracements can identify potential support / resistance levels. … From a trading perspective, the most commonly used Fibonacci levels are the 38.2%, 50%, 61.8% and sometimes 23.6% and 76.4%.
How do you use Fibonacci extensions?
In an uptrend, the general idea is to take profits on a long trade at a Fibonacci Price Extension Level. You determine the Fibonacci extension levels by using three mouse clicks. First, click on a significant Swing Low, then drag your cursor and click on the most recent Swing High.
[source: investopedia]
