Fibonacci rates in the forex market can be regarded as very strong price indicators. A trader can use this tool either alone or in combination with other indicators.
Determine long term peaks and lows by using Fibonacci indicators. You can look a few 1H, 4H, days, weeks, or even months ahead. The goal is to find the degree of support or resistance which is very evident.
The key condition of good use of Fibonacci levels is an orientation only at the peaks and lows most apparent. How is that so significant? If you want all the other market participants to use the same rates. When these levels are reached, they are reacted by many forex traders which will cause the market to move. The Fibonacci retracement levels are 23.6%, 38.2%, 61.8%, and 78.6%.
You will gain more confidence in your Forex business dealings by seeking a confluence. If you land at the same price point as the double bottom or top level of Fibonacci, you can rest assured that the market will value that price. The price at least stops when it hits this point and more than likely it will roll away far enough to make sure you’ve made a profit.
Another thing that is very good at Fibonacci Levels is that they go beyond the peaks and lows in the price tracker that you used to rely on. For example, the price is more than shows you a very strong point of resistance and moves upward. If the price exceeds the resistance, you enter a trade but don’t know where to put the target of profit-taking. These levels are also good to use with Suppy and Demand Levels to find valid price retesting.
Fibonacci levels stretch beyond its limits, offering you the amount of benefit taking. These are called the Fibonacci extensions and let the market tell you where it’s best to take your money, without having an arbitrary number of pips to choose from.
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