What is the Fibonacci Sequence and How Can You Use It in Trading?
The Fibonacci sequence is a series of numbers where each number is the sum of the two preceding ones (e.g., 0, 1, 1, 2, 3, 5, 8…). Its key ratios, such as 23.6%, 38.2%, 61.8%, and 100%, are derived from these numbers and are often applied in trading for technical analysis.
📊 How to Use Fibonacci in Trading:
1. Fibonacci Retracement Levels
• Identify potential support and resistance levels in trending markets.
2. Trend Reversal Points
• Pinpoint areas where price might reverse.
3. Risk Management
• Set stop-loss or take-profit levels using these retracement points.
Fibonacci tools can provide insights into market psychology and price behavior. Use them with other indicators for more accurate predictions!