#斐波那契 In the financial market, the Fibonacci sequence and its derived Fibonacci ratios (such as 0.236, 0.382, 0.5, 0.618, etc.) are widely used in technical analysis to predict potential support and resistance levels in market price movements. Here are detailed application scenarios and methods:
1. Fibonacci Retracement
Fibonacci retracement is one of the most common technical analysis tools in the financial market. Traders use it to identify potential support or resistance levels where market prices may find support or face resistance during upward or downward trends.
- How it Works:
Traders select a significant high point and low point (such as the highest and lowest points of a rally) and then plot the Fibonacci ratios (0.236, 0.382, 0.5, 0.618, 0.786) within this range. The levels corresponding to these ratios are considered potential support and resistance levels.
- Practical Operation:
- Suppose a stock rises from $20 to $50; during the pullback of this rally, traders can plot Fibonacci retracement from $20 to $50.
- The retracement levels will automatically draw the following levels between $50 and $20: 38.2% (approximately $37.24), 50% ($35), 61.8% ($32.90), etc.
- When prices decline, traders observe these retracement levels to determine if prices will find support at these points, thus deciding when to buy.
2. Fibonacci Extensions
Fibonacci extensions are used to identify target prices after trend continuations, predicting where prices will reach when market prices break through a key point.
- How it Works:
Fibonacci extensions are based on the same Fibonacci ratios but extend beyond the retracement range, with common levels of 1.236, 1.618, 2.618, etc. These values are used to predict the next target in the market.
- Practical Operation:
- For example, in an upward trend, traders can draw Fibonacci extensions from the bottom to the top to confirm potential new highs after breaking key resistance.
- Suppose a stock rises from $30 to $50 and then retraces to $40. Traders can plot Fibonacci extensions to calculate the 1.618 times and 2.618 times fluctuations between $50 and $30, thus anticipating the next upward target.
3. Fibonacci Time Zones
Fibonacci time zones are used to predict critical turning points in the market over time. These timelines are based on the Fibonacci sequence (such as 1, 2, 3, 5, 8, 13...), used to determine possible trend reversal points.
- How it Works:
Traders plot a key price fluctuation on the chart, starting from the beginning of that fluctuation, using the Fibonacci sequence to calculate time intervals; these time points usually indicate turning points in price movements.
- Practical Operation:
- If a stock's price begins to rise from a significant low point, traders can plot Fibonacci time zones and observe performance on the 3rd, 5th, 8th, and 13th days to determine whether a trend reversal will occur at these time nodes.
4. Fibonacci Fan
The Fibonacci fan consists of Fibonacci ratios and trendlines combined to find support and resistance lines. Its function is similar to retracements and extensions, but by drawing 'fan' lines that diverge from a point on a trendline, it predicts possible support and resistance points during price adjustments.
- Practical Operation:
- After traders select a significant high point and low point, they draw the Fibonacci fan. When market prices retrace, the lines in the fan will show potential support levels; during an uptrend, they will show resistance levels.
5. Actual Application Cases
- Stock Market: In the stock market, Fibonacci retracement and extension are used to determine entry and exit points. For example, in a bull market, when stock prices retrace, traders may enter at the 38.2%, 50%, or 61.8% retracement levels.
- Forex Market: Forex traders often use Fibonacci tools to predict support and resistance levels of currency pairs. For example, when EUR/USD fluctuates within a significant range, traders use retracements to find suitable buy and sell points.
- Futures Market: Futures traders use Fibonacci extensions to set price targets, especially after market breakouts, where extension levels provide potential next target points.
6. Reasons for Fibonacci Ratios
Why are these ratios effective? The ratios in the Fibonacci sequence are closely related to the 'Golden Ratio' in nature, and human reactions to symmetry and proportion are associated with it. In financial markets, this proportional phenomenon reflects market sentiment and trends, so the application of these ratios can effectively predict price movements.
7. Advantages and Limitations
Advantages:
- The Fibonacci tool helps traders identify key support and resistance levels, making more informed buy and sell decisions.
- Price levels calculated through ratios can set reasonable stop-loss and profit points for investors.
Limitations:
- The Fibonacci tool relies on the selection of past price movements, and different selections of high and low points may yield different results.
- Price fluctuations in the market do not always precisely fall on Fibonacci levels; traders need to combine other analytical methods (such as candlestick patterns, moving averages, etc.) for comprehensive judgment.
The correct use of Fibonacci technical analysis tools relies on rich experience and market perception, so beginners are advised to start with simple retracements and extensions, gradually familiarizing themselves with the usage of each tool.
Next Episode Preview: The Application of Fibonacci in the Cryptocurrency Industry
