Fibonacci in trading is a tool that helps determine levels at which the price may pause or reverse. It is based on a sequence of numbers where each subsequent number is the sum of the two previous ones (for example, 0, 1, 1, 2, 3, 5, 8, and so on).
Key levels:
🟡23.6%
🟣38.2%
🔘50%
🔴61.8%
⚫️100%
Example:
Uptrend ↗️
Draw the Fibonacci grid from the lowest point (bottom) to the highest (peak).
The tool shows levels at which the price may pause or go down (for example, 38.2%, 50%, 61.8%).
Downtrend 📉
Draw the grid the other way — from peak to bottom.
Why is this needed?
We use Fibonacci levels to understand where the price may slow down or go in the opposite direction. For example, if the price has risen by 100%, it may retract by 50% or 61.8%, and then go up again 👆
Using the Fibonacci grid, one can plan their trades in advance, analyze price movements, and find optimal entry and exit points. However, it is important to remember that this tool does not provide 100% guarantees and is best used in conjunction with other analysis methods for making more informed decisions.
