Fibonacci Retracement

Really important to know when to use Fibonacci (Fib) is, that it works the best when the market is trending. 


This is a daily chart of AUD/USD.
Daily chart of AUD/USD with Fibonacci retracement levels
Here the Fibonacci retracement gets plotted Levels by clicking on the Swing Low at .6955 on April 20 and dragging the cursor to the Swing High at .8264 on June 3.You dont have to do anything. The program makes it all it selfs. Isn't that great ?!
As you can see from the chart, the retracement levels were .7955 (23.6%), .7764 (38.2%), .7609 (50.0%), .7454 (61.8%), and .7263 (76.4%).
Now, the expectation is that if AUD/USD retraces from the recent high, it will find support at one of those Fibonacci levels because traders will be placing buy orders at these levels as price pulls back.
Now, let's look at what happened after the Swing High occurred.
38.2% Fib level held as support
Price pulled back right through the 23.6% level and continued to shoot down over the next couple of weeks. It even tested the 38.2% level but was unable to close below it.
Later on, around July 14, the market resumed its upward move and eventually broke through the swing high. Clearly, buying at the 38.2% Fibonacci level would have been a profitable long term trade!


Now, let's see how we would use the Fibonacci retracement tool during a downtrend. Below is a 4-hour chart of EUR/USD.
4-hour chart of EUR/USD with Fibonacci retracement levels
As on the uptrend, you just drag it from the high to the low instead of low to high.
And again your retracements show up.

50.0% Fib level held as resistance
How beautiful! This time it held on 50% retracement. and even broke the initial swing high.

For now, there's something you should always remember about using the Fibonacci tool and it's that they are not always simple to use! If they were that simple, traders would always place their orders at Fib levels and the markets would trend forever.
In the next lesson, we'll show you what can happen when Fibonacci levels fail.

Penulis : KalOo ~ Sebuah blog yang menyediakan berbagai macam informasi

Artikel Fibonacci Retracement ini dipublish oleh KalOo pada hari 09 September 2011. Semoga artikel ini dapat bermanfaat.Terimakasih atas kunjungan Anda silahkan tinggalkan komentar.sudah ada 5 komentar: di postingan Fibonacci Retracement


  1. This is insane, I understand that it isnt 100% but god, whoever started this is simply amazing.

  2. Although I don't know much about this subject I found this blog pretty interesting.

  3. I'm going to go back and reread the prior post on this tool because I'm somewhat confused as to how it works.

  4. Hmmm... This might be interesting to apply, too bad I can't by now