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FIB LEVELS

In technical analysis, a Fibonacci retracement is created by taking two extreme points (usually a peak and a trough) on a stock chart and dividing the vertical distance by the key Fibonacci ratios of 23.6%, 38.2%, 50%, 61.8%, and 100%.

Fibonacci retracements are popular tools that traders can use to draw support lines, identify resistance levels, place stop-loss orders, and set target prices.

For unknown reasons, these Fibonacci ratios seem to play a role in the stock market, just as they do in nature. Technical traders attempt to use them to determine critical points where an asset's price momentum is likely to reverse.

Fibonacci retracements are the most widely used of all the Fibonacci trading tools.

They can be used to draw support lines, identify resistance levels, place stop-loss orders, and set target prices. Fibonacci ratios can even act as a primary mechanism in a countertrend trading strategy.

Fibonacci retracement levels are horizontal lines that indicate the possible locations of support and resistance levels. Each level is associated with one of the above ratios or percentages. It shows how much of a prior move the price has retraced. The direction of the previous trend is likely to continue. However, the price of the asset usually retraces to one of the ratios listed above before that happens.

The use of the Fibonacci retracement is subjective. Traders may use this technical indicator in different ways. Those traders who make profits using Fibonacci retracement verify its effectiveness. At the same time, those who lose money say it is unreliable. Others argue that technical analysis is a case of a self-fulfilling prophecy. If traders are all watching and using the same Fibonacci ratios or other technical indicators, the price action may reflect that fact.

FIB LEVELS VIDEO TUTORIAL