Fibonacci Trading

{"@context":"https://schema.org","@type":"FAQPage","mainEntity":[{"@type":"Question","name":"What is Fibonacci Trading?","acceptedAnswer":{"@type":"Answer","text":"Fibonacci trading is based on a key series of numbers discovered in the 13th century by Italian mathematician Leonardo Fibonacci. The series of numbers is created by adding each of the next two numbers in the series to create the following number. Thus the series goes 0, 1, 1, 2, 3, 5, 8, 13, 21, etc, into infinity. In technical analysis of financial markets the numbers themselves aren’t as important as the ratios between the numbers. Traders use these ratios - 23.6%, 38.2%, 50%, 61.8%, and 100% - to identify support and resistance areas for markets."}},{"@type":"Question","name":"What are Strategies for Trading Fibonacci Retracements?","acceptedAnswer":{"@type":"Answer","text":"Fibonacci retracement levels are created by taking the high and low price points on a chart and marking the key Fibonacci ratios on the chart horizontally, thus creating areas of support and resistance where prices are likely to reverse. Often these levels are used as part of a trend trading strategy, where traders look for prices to retrace when reaching the key Fibonacci ratios, and then enter in the direction of the original trend. Traders often add other indicators to their trading strategy to confirm the signals given by the Fibonacci retracements."}},{"@type":"Question","name":"How are Fibonacci Extensions used in Trading?","acceptedAnswer":{"@type":"Answer","text":"Fibonacci extensions are levels that are drawn beyond the 100% level and these levels are often used by traders to identify potentially good areas for exiting a trade and taking profits. They can also be good areas to watch for reversals or pullbacks. The major Fibonacci extension levels are 161.8%, 261.8% and 423.6%. It’s important to note that Fibonacci extensions are simply possible areas of interest. For example, price may move just slightly above the 161.8% level before reversing, or it could stop just shy of that level and revese."}}]}