Specific Use of Fibonacci in Binance Charts: PART I
Fibonacci retracements and Fibonacci extensions are very popular technical analysis tools widely used in trading, including cryptocurrencies on platforms like Binance. They are based on the Fibonacci sequence, a series of numbers where each number is the sum of the two preceding ones (0, 1, 1, 2, 3, 5, 8, 13, 21, 34, etc.).
What really matters for trading are the proportions derived from this sequence, such as 23.6%, 38.2%, 50%, 61.8%, 78.6%, 100%, 127.2%, 161.8%, 261.8%, etc.
1. Fibonacci Retracements
* What are they? They are horizontal lines drawn on a chart to indicate possible levels of support or resistance where the price of an asset could stop and reverse, or consolidate, after a significant movement.
* How are they used in Binance?
* Identify a significant price movement: Look for a clear "swing", either a bullish impulse (from a low to a high) or a bearish impulse (from a high to a low).
* Draw the tool:
* For an uptrend: Draw the Fibonacci tool from the low of the impulse to the high.
* For a downtrend: Draw the Fibonacci tool from the high of the impulse to the low.
* Interpret the levels: The chart will automatically show horizontal lines at key Fibonacci levels (the most common are 23.6%, 38.2%, 50%, and 61.8%).
* These levels act as possible retracement zones where the price could "bounce" and continue its original trend.
* The 50% and 61.8% (the "golden ratio") are considered the most important levels, as many traders watch and act on them, which can make them a kind of "self-fulfilling prophecy"...
