Forex Trading Academy: Fibonacci Webinar

There is a lot of speculation surrounding this method, especially on the internet. This method if applied well, usually works. We can see in this video how to use it. Using fibonacci ratios starts with drawing a trendline between the swing low and swing high in an uptrend or between a swing high and swing low in a downtrend. You can then decide which levels you want to show up on your chart. Most people choose to show only the 0.25 or the 0.618 level, the 0.5 and the 0.382 level. I suggest you do the same. Let’s look at this downtrend situation. Basically, these lines will show you retracement levels. They give you an indication of where the price will temporarily find resistance, once it starts to go up.

In other words, they provide you with a target of where the price is likely to go, if a trend retraces. A target you can use to train your exit strategy, Keep in mind that these are not magical values for price to bounce off. They can be better viewed as demarcating a sensitive zone. Prices will cross the retracement lines or they may not. They may on occasion decide to just plunge through the retracement levels because the movement is just so strong. Nevertheless, in most cases for whatever reason a retracement will obey the fibonacci rule. The more timeframes you use to gauge the retracement levels, the stronger the evidence that hidden resistance or support. In an uptrend, retracement levels coincide with support.

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