#candlestick_patterns
🔥Candlestick Structures & Basics | Candlestick patterns, Trading charts, Candlesticks🔥
Unlocking Fibonacci Retracement: A Trader’s Guide 📊
Fibonacci retracement is a go-to tool for traders to spot potential support and resistance levels in the market. Here’s a quick dive into what it is and how to use it! 🚀
1️⃣ What is Fibonacci Retracement?
It’s a technical analysis tool that uses key Fibonacci levels (derived from the Fibonacci sequence: 0, 1, 1, 2, 3, 8, 13, …) to draw horizontal lines at 23.6%, 38.2%, 50%, 61.8%, and 100%. These levels highlight where price may find support or resistance before resuming its trend.
2️⃣ How to Use It?
• Identify a price range (e.g., a stock moving from $50 to $60).
• Draw Fibonacci levels from the low ($50) to the high ($60).
• Levels appear at: $54.50 (23.6%), $56.20 (38.2%), $55 (50%), $53.80 (61.8%), $50 (100%).
• Use these to spot potential entry/exit points or areas where price might pause or reverse.
3️⃣ Why It Works?
Markets often retrace a predictable portion of a move (based on the golden ratio ~1.618) before continuing in the original direction. For example, if a stock rises from $80 to $100, Fibonacci levels at $94.60, $90.80, $87.50, $84.20, and $80 can signal support zones during pullbacks.
💡 Pro Tip: Combine Fibonacci retracement with other indicators for stronger trading decisions. It’s a powerful tool to enhance your strategy!
