But first, if you are new to this fibonacci trading thing, you go to understand some definition of some fibonacci trading terms like:. Many traders do not know this but the concept of fibonacci retracement and fibonacci extension are based on support and resistance.

Fibonacci Retracement levels are simply ratio used by traders to identify potential levels where price can reverse from. To know more about this fibonacci ratios, you have to know what a fibonacci sequence is… I know, this is boring! A fibonacci retracement is a simply a technical analysis method of finding support and resistance levels on your charts. So in a downtrend market, fibonacci retracements can be used to find potential resistance levels.

A fibonacci extension is used to project or forecast into the future where price may likely hit resistance or support. Well, it is used by many forex traders to determine the price levels where they can set their profit targets.

We know that in a downtrend, prices do not keep falling all the time. There will be times when price will stop falling and bounce back up. And one way to anticipate this is for you to know how to draw a fibonacci extension in a downtrend to give you the heads up of the potential support level price may encounter. In this case, notice that price went down to Knowing such behavaviour, you can set your take profit targets on There will be times when price are going to fall because they are going to hit a resitance level somehwere up.

Thats where drawing a fibonacci extension in an uptrend becomes handy as it one way or a tool that can help you identify potential resistance levels where price will hit and drop.

As you can see on the chart below that price did indeed react to the And thanks for visiting forextradingstrategies4u. Hi Rkay The fib Explained in comprehensive and easy to understand way, well done!

Forex fibonacci expansion

Menu Simple Forex Trading Strategies Price Action Trading Course Price Action Trading Strategies FX Trading Signals. From the Fibonacci Sequence you get a series of ratios, and it is these ratios that are important to forex traders. The most important Fibonacci ratio is Here are a few examples: These two ratios seem to have a lower level of success, but are still included for technical analysis purposes. Prev Article Next Article. Recent Posts Free Forex Trading Signals Published Weekly.

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