How to Use Fibonacci Retracement

This article will discuss how to use Fibonacci Retracement. Fibonacci Retracement is a technique that investors and traders consider to determine the best time to enter or exit a specific trading position.

What is Fibonacci Retracement?

Fibonacci Retracement is a method of technical analysis that various investors and traders adopt to determine the level of support and resistance in a specific market.

How to Use Fibonacci Retracement
Photo credit: Fullerton markets

The Best Time Frame for Fibonacci Retracement

Fibonacci Retracement is an excellent method of analyzing the market before making any trading decision, and this can be applied on a daily or weekly basis.

However, the best time frame for using Fibonacci Retracement is usually a 5-minute chart time frame that a trader or an investor can consider.

The Best Fibonacci Retracement Levels

Fibonacci Retracement assists various traders and investors analyze the market and spotting promising positions to trade.

It has many levels, including 23.6%, 38.2%, 50%, and 61.8%. The best Fibonacci Retracement levels that a trader or an investor should consider are 38.2% and 61.8%.

How to Use Fibonacci Retracement

Fibonacci Retracement usually is not included in a trader or an investor’s favorite list of tools, and one must add it by clicking on the star next to the tool icon.

a trader or investor to successfully draw the Fibonacci Retracement levels, they usually would require skill and understanding.

The trading view’s Fibonacci Retracement tool helps to make technical analysis very easy. This trading view helps compute the Fibonacci sequence and ratios, which helps lessen the complex nature of many mathematical calculations.

To use Fibonacci Retracement’s trading view, you need to locate the tools for drawing the Fibonacci on the left side of your trading view screen.

Also, you can simply add this tool to your favorites to make it easy to use. This toolbar has a trading view’s list of tool groups which you would need to select Fibonacci Retracement collections of tools. To access the Fibonacci Retracement, select “Gann and Fibonacci Tools”.

How to Use Fibonacci Retracement in Uptrend

Fibonacci Retracement is applicable for traders and investors who intend to monitor both an uptrend and a downward trend. Below are the steps to using Fibonacci Retracement in an uptrend in a specific market.

  • Identify the Direction of the Market

The first step in using Fibonacci Retracement is for a trader or an investor to identify where the market is going. In this case, you must carefully spot an uptrend before taking the next step.

  • Attach the Fibonacci Retracement

Once you have monitored and identified that the market is on an uptrend, the next thing is to attach the Fibonacci Retracement at the bottom and carefully drag it to the right, straight to the top.

  • Monitor the Support Levels

The last step to using Fibonacci Retracement in an uptrend is carefully monitoring the retracement levels, which include 0.236, 0.382, and 0.618.


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How to Use Fibonacci Retracement with Support and Resistance

Using Fibonacci Retracement with support and resistance is easy and one of the best ways to spot promising investment positions. To successfully use both, you must wait patiently for a zone where they clash.

To use Fibonacci Retracement with support and resistance, you need to spot the correct support and resistance lines and add the Fibonacci Retracement to your trading chart.

You need access to a trading platform with various technical indicators like Fibonacci Retracement lines.

Why is Fibonacci Retracement in Trading?

Fibonacci Retracement is one of the most considered tools traders utilize to identify support and resistance levels, decide on stop loss and determine and set their target price.

How Accurate is Fibonacci Retracement?

Various traders and investors can use Fibonacci Retracements in multiple time frames, but it is mainly considered to be very accurate and effective in a longer time frame.

Fibonacci Retracement is an excellent method of conducting various analyses on the market.

Traders and investors can add this to their trading strategies as it would effectively help them spot good trading positions.

We hope this article will help you in using the Fibonacci retracement. Kindly visit our comment section for your views and opinions.

Watch the video below to know how to use Fibonacci Replacement:

About Author

How to Use Fibonacci Retracement
Victor Akpan
I am a content writer with over 2 years of experience in content writing. I create quality and highly researched content on cryptocurrency and forex.

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