Fibonacci

Fibonacci

Fibonacci Introduction
Leonardo Fibonacci is a famous Italian mathematician, founder of a simple series of numbers that refer to ratios valid for natural proportions of things on the planet. These ratios appear from the next numbers: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, ..., and found while performing next calculations: 1+2=3, 2+3=5, 3+5=8 etc.
If to measure the ratio of any number to one of the next higher number the result will be 0.618. For example, 21/34=0.618.
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How to calculate Fibonacci
Three most used Fibonacci retracement levels are 0.382 or 38.2%, 0.500 (50%) and 0.618 (61.8%).
Three most used Fibonacci extension levels are 0.618, 1.000 and 1.618. Also 1.382 extension can be applied as well.
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Fibonacci Great Advantages
1. Fibonacci defines entry points
Take a look how Fibonacci tool was applied on the chart below. (From point A, dragging all the way to point B. Done!) The trading platform will automatically calculate Fibonacci levels for you and draw lines of retracement and extension levels.
Once all Fibonacci levels are in place we will look and wait for some good point C to place our BUY order.
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Fibonacci Retracements & Extension
Fibonacci Retracement Levels are:
0.382, 0.500, 0.618 — three the most important levels Fibonacci retracement levels are used as support and resistance levels.
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Fibonacci Fans
Fibonacci Fan is another Fibonacci retracement tool that takes both price and time into consideration. Comparing to horizontal Fibonacci lines it offers an additional feature — price movement projection far further in time.
The price projection is based on fan-like trend lines that represent already familiar to us Fibonacci numbers: 0.382, 0.500 and 0.618.
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Fibonacci Arcs
Fibonacci Arcs are constructed by first drawing a trendline between two extreme points on a chart; for example, a trough and the opposing peak. Three arcs are then drawn, centered about the second extreme point.
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Fibonacci Time Zones
Fibonacci Time Zones are a series of vertical lines that are spaced at the Fibonacci intervals of 1, 2, 3, 5, 8, 13, 21, 34, etc. The first line is placed at an extreme point on the chart and the lines that follow are spaced at increasingly wider intervals in accord with the Fibonacci sequence.
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Frequently Asked Questions about Fibonacci
Now that we showed you how to pick entries using Fibonacci, let's discuss how to pick smart entries with Fibonacci method and also how to increase your trading success with this great tool.
Let's answer some frequently asked questions:
How accurate is Fibonacci study, does it always work?
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