How Fibonacci Helped Me Trade Forex

The tool is based on the Fibonacci sequence, which is a series of numbers where each number is the sum of the two preceding numbers (e.g. 1, 1, 2, 3, 5, 8, 13, 21, etc.). In Fibonacci retracements, the key levels are calculated by taking the high and low points of a given chart and applying Fibonacci ratios to those levels.

The most commonly used Fibonacci ratios are 23.6%, 38.2%, 50%, 61.8%, and 100%. These ratios are calculated by dividing the vertical distance between the high and low points of a chart by the key Fibonacci numbers (i.e. 0.236, 0.382, 0.5, 0.618, and 1). These ratios are then used to determine the potential levels of support and resistance in the market.

Traders use Fibonacci retracements to identify potential levels where the market may reverse or continue its trend. For example, if a market is in an uptrend and retraces to the 38.2% Fibonacci level, traders may look for buying opportunities as this level is considered a potential area of support. Conversely, if a market is in a downtrend and retraces to the 61.8% Fibonacci level, traders may look for selling opportunities as this level is considered a potential area of resistance.