Why Does Fibonacci Work in Trading?
It all started in 1202 when Leonardo of Pisa—better known as Fibonacci—introduced a curious sequence of numbers to the world: 0, 1, 1, 2, 3, 5, 8, 13… Each number is the sum of the two before it. Simple, right? Yet, this sequence unlocked one of nature’s biggest secrets.
Fibonacci’s sequence appears everywhere: the spiral of a seashell, the petals of a sunflower, the branching of trees—even the structure of galaxies. These patterns align with the golden ratio (1.618), a universal blueprint for balance and proportion.
How Does Fibonacci Apply to Trading?
Markets, like nature, are driven by psychology and patterns. Traders lean on Fibonacci retracements to identify key price levels where trends may pause, reverse, or continue.
The Golden Pocket: The Trader’s Sweet Spot
The “golden pocket” sits between the 61.8% and 65% retracement levels—a magnet for reversals. It’s where buyers or sellers often regroup, creating high-probability setups.
How to Use It in Your Trades
1. Identify a Trend: Draw Fibonacci from the swing low to the swing high (or vice versa).
2. Look for the Golden Pocket: Watch for price action at the 61.8%–65% zone.
3. Combine Confluences: Volume, candlesticks, or moving averages aligning with Fibonacci strengthen your setup.
The Fibonacci sequence is more than numbers; it’s nature’s rhythm, reflected in the ebb and flow of markets. Learn to spot these levels, and you’re trading in harmony with forces as old as time.
Trade wisely!
