HOW TO USE FIBONACCI TIME ZONE

HOW TO USE FIBONACCI TIME ZONE

The Fibonacci time zone is a technical analysis tool used to identify potential reversal points in time. Here is a guide on how to use it:

Step 1: Identify the Starting Point

Select a significant point on the chart, such as a major high or low. This will be the starting point for the Fibonacci time zone.

Step 2: Draw the Fibonacci Time Zone

Select the Tool: In your trading platform (such as TradingView or MetaTrader), select the Fibonacci time zone tool.

Draw the Base Line: Draw a line from the starting point to another significant point on the chart. This will establish the base interval.

Adjust the Lines: The tool will automatically draw a series of vertical lines at increasing intervals based on the Fibonacci sequence (1, 2, 3, 5, 8, 13, 21, etc.).

Step 3: Interpret the Lines

Vertical Lines: These lines represent possible areas of temporal significance. They do not indicate price levels, but moments in time where a reversal or a significant change in trend may occur.

Reversals: Observe how the price behaves near these lines. If the price shows signs of reversal near a Fibonacci line, it could be a signal of a trend change.

Practical Example

Bullish Trend: If the price of an asset is rising, draw the Fibonacci time zone from a significant low to a recent high.

Bearish Trend: If the price is falling, draw the Fibonacci time zone from a significant high to a recent low.