5. Fibonacci Retracement

 

◆ Fibonacci retracement?

 

 

The Fibonacci retracement was derived from a series of numbers discovered by the 13th century mathematician Leonardo Fibonacci. This mathematical relationship shows a sequence of numbers: 0%, 23.6%, 38.2%, 61.8%, 78.6%, 100%.

 

 

◆ What is an array?

 

An array is the sum of the leading and trailing numbers.

 

1,1,2,3,5,8,13,21,34,55,89,144 It goes like this.

 

 

So what about chart indicators? What is the Fibonacci retracement used as a concept?

 

 

◆ Arrangement in Charts

 

Even on a rising chart, corrections always occur and take a break. Think of this as a retracement concept, and it is a term with a number by grafting the adjustment ratio to the Fibonacci ratio. 'Fibonacci retracement'

 

 

13/21,21/34,34/55 The leading number divided by the trailing number is 0.618.

21/55,34/89,55/144 The leading number divided by the trailing number is 0.382.

 

 

 

When expressed in %, the values ​​of 38.2% and 61.8% are obtained. The theory is that adding 50% to these two percentages will result in a retracement rate of 38.2%, 61,8%, and 50% when adjusted after an increase.

 

 

This is used to predict the timing of a rebound after correction. If the retracement is short, the next rise is large, and if the retracement is large, the rise is generally low.

 

 

 

◆ Use of Fibonacci Trading

 

Fibonacci retracements are usually used in bull markets. I use the lows and highs in succession. Personally, I do not use the Fibonacci retracement as a lagging auxiliary indicator for trading. By using the Fibonacci retracement indicator, you can find a section with support and a section with resistance. In this way, you can set the timing of buying and selling.

 

The Fibonacci retracement indicator could be used for trading, but it is not necessarily the answer. If the Fibonacci retracement indicator could accurately predict it, all traders would have used it. Therefore, in order to know only what the Fibonacci retracement indicator is and use it for trading, it would be much more accurate to use other indicators together.

 

However, 0.5 and 0.618 are important values ​​when using the Fibonacci retracement. This is because this section (see image above) is most likely a strong support or resistance section. In other words, if you understand easily, it can be said that the points of 1/3 and 2/3 of the chart are 0.382 and 0.618 points.

 

Typically, these studies are used to predict levels of support and resistance through the relationship between Fibonacci numbers. The most used relationships are:

 

0.618 (61.8%): The Fibonacci number divided by the next number is about 0.618.

0.382 (38.2%): The Fibonacci number divided by the number occupying two postfixes is about 0.3820.

0.2360 (23.60%): The Fibonacci number divided by the number occupying three postfixes is approximately 0.2360.

0.764 (76.4%): The difference between 38.2% and 23.6% is obtained by adding 61.8%, i.e. 76.4% = 61.8% + (38.2% – 23.6%).

0.5 (50%): About half of the main flow, the average is 38.2% to 61.8%.

0.0 (0%): The start of the market movement.

 

1.9 (100%): End of market movement.