#SwingTradingStrategy

Fibonacci Retracements

Fibonacci tools are widely used in swing trading to identify potential support and resistance levels within an established trend. Fibonacci retracements are based on the idea that after a significant price movement, the price will tend to retrace a predictable portion of that movement before continuing in the original direction.

How to use Fibonacci retracements?

1. Identify a trend: There must be a clear upward or downward trend.

2. Draw the Fibonacci: In an upward trend, draw from the low to the high of the movement. In a downward trend, draw from the high to the low.

3. Observe key levels: The most common retracement levels are 23.6%, 38.2%, 50%, 61.8%, and 78.6%. These levels act as potential support areas in an upward trend and resistance in a downward trend.