Leonardo of Pisa—Fibonacci. An Italian mathematician who lived in the 13th century, considered one of the greatest mathematicians of the Middle Ages. Known for his work 'Liber Abaci' (1202), where he popularized the Arabic numeral system in Europe.
But its forte is the Fibonacci sequence. A system that became the foundation for scientific and applied research. The indicator, named after Fibonacci, is used in technical analysis to predict levels of correction and resistance.
It helps traders identify where corrections or trend reversals may occur.
This is related to psychology: market participants subconsciously react to certain levels, which is often confirmed by historical data.
Let's analyze examples.
When working with the indicator, it is necessary to specify important levels and remove less informative ones. This is done so that the already 'large' tool does not obscure other indicators.
First, the 'Fibo grid' is stretched, but before that, one needs to get acquainted with the concept of 'swing'.
A swing is a candle that has two upper maxima on its right and left, or upper minima depending on the trend.
Only after finding a swing can one continue.
According to the rules, the 'Fibonacci Levels' tool is stretched from the beginning of the trend to its end (from 1 to 0). These levels serve as a kind of support and resistance levels.
The essence is to wait until the price cannot overcome the Fibonacci level, and it will act as support or resistance—depending on the trend.
What will happen on the chart?
By using 'Fibonacci Correction', we find support and/or resistance levels. We filter through the volume profile to eliminate less significant levels. And we find out:
⤵️ Potential entry point = $0.003547
⤵️ Global target fixation = $0.006611
The ability to use both tools within one trading strategy increases the chances of success.