Fibonacci retracements and other trading techniques

 
What does all this have to do with trading? Some market participants believe that stock market prices also follow Fibonacci ratios because mass psychology is a kind of natural phenomenon. This idea became popular in the 1980s. At that time, the American stock market analyst Robert Prechter attracted attention with sometimes astonishingly accurate forecasts. The basis was Elliott's so-called wave theory, which assumes a fractal, i.e. self-similar, wave structure of market movements. According to the theory, corrections (retracements) are in Fibonacci relationships to previous impulsive upward or downward movements.

In the meantime, Fibonacci trading has separated from Elliott Wave theory. Some traders use both, but many use only Fibonacci ratios. There are a number of ways to do this.

Fibonacci trading theory

    Fibonacci retracements: According to the theory, Fibonacci ratios can be used to determine the possible end points of a correction. Example: The market rose 500 points in an upward swing. Then the method suggests that the following downward correction could end after about 118 points (500 x 0.236), 191 points (500 x 0.382) or 309 points (500 x 0.618).
    Fibonacci fans: These special trend lines function similarly to the retracements and also serve as possible support and resistance zones. They start at the starting point of a move and go to highs of 23.6%, 38.2% and 61.8% through a vertical line at the previous high.
    Fibonacci extensions: In this case, the Fibonacci values are used to determine possible resistance and thus price targets after a correction. For this purpose, usually 23.6 %, 38.2 %, 61.8 % and 100 % of the length of an identified upward movement are added to the previous high.
    Fibonacci time projections: When is the next important turning point? Fibonacci time projections try to answer this question. For example, if an upward movement lasted 100 days, according to the method a low is to be expected after about 38 or 62 days of correction. The 0.236 ratio is less common here.
    Fibonacci circles: If this is not enough, you can go one step further. A 100% Fibonacci circle has its centre at the end point of a movement and passes through its starting point. On this basis, circles with diameters of 38% and 62% can be drawn on the chart. They are intended to act as supports and resistances.

It is also possible to apply these techniques to downward movements, for example to determine the potential end of a bear market rally.

Conclusion by trade-exness:

  "ซีรี่ส์ Fibonacci สามารถนํามาใช้เพื่อให้ได้อัตราส่วนทองคําซึ่งปรากฏในศิลปะและในธรรมชาติ.
    ผู้ค้าบางรายเชื่อว่าอัตราส่วน Fibonacci สามารถอธิบายและคาดการณ์การเคลื่อนไหวของตลาด.
    พวกเขาใช้อัตราส่วน Fibonacci เพื่อกําหนดแนวต้านและแนวรับและทําให้จุดเปลี่ยนในอนาคตเป็นไปได้ใน โหลด exness.
    ผู้ค้าบางคนสาบานด้วยวิธีการ. อย่างไรก็ตามไม่มีหลักฐานทางวิทยาศาสตร์ที่ใช้งานได้."

  " The Fibonacci series can be used to derive the golden ratio, which appears in art as well as in nature.
    Some traders believe Fibonacci ratios can describe and forecast market movements.
    They use Fibonacci ratios to determine resistance and support lines and thus possible future turning points.
    Some traders swear by the method. However, there is no scientific proof that it works."