Fibonacci history
Fibonacci ratios are quite popular among the teknikalis. The figures generated from the calculation of this ratio is enough to help us in determining the level of entry and exit.
Fibonacci ratio was first introduced by a medieval mathematician from Italy. His name was Leonardo Fibonacci who comes from the city of Pisa. He introduced the ratio of the numbers contained in the proportion of forms in nature. The number series he also engage in the calculation of breeding rabbits in an ideal situation. At a later date, the series is known as the Fibonacci sequence or the Fibonacci numbers.
The sequence is: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, ... and so on.
Trivia quiz for you: what comes after 89? If you answer correctly without asking uncle or aunt Google Wiki, then it looks like you have a great potential to become a reliable teknikalis.
From the series tersebutlah found there is a ratio of the most found in any shape of objects in nature, which is approximately 1: 1618 or 0618: 1. This ratio is then referred to as the "golden ratio".
That little saga Fibonacci. Okay, you'll get out of all this mathematical complexity ... (Finally!)
In application of the Trading: Fibonacci Retracement
Relax, you did not need to calculate Fibonacci ratios in trading practices. We use trading platform (Metatrader) has provided a tool that helps us to apply the knowledge heritage of this Fibonacci instantly. The name of the tool is the Fibonacci Retracement.
Traders use levels provided by Fibonacci Retracement to help determine the range of potential areas as support and resistance. This tool can be put to good use when the market is in a state of "trending", be it the current up trend or down trend. The basic concept of the use of Fibonacci retracement is looking for opportunities to buy is the price is in the range of support. Instead, you can look for opportunities to sell is the price is in the range of resistance derived from the Fibonacci retracement.
To be able to find the retracement levels, you must first find the terlabih dots significant highs and lows. These points are what we call "swing high" and "swing low".
At the time of the movement in the up trend, all you do is draw Fibonacci retracement from the swing low to swing high as seen in the image below.
Fibonacci ratios are quite popular among the teknikalis. The figures generated from the calculation of this ratio is enough to help us in determining the level of entry and exit.
Fibonacci ratio was first introduced by a medieval mathematician from Italy. His name was Leonardo Fibonacci who comes from the city of Pisa. He introduced the ratio of the numbers contained in the proportion of forms in nature. The number series he also engage in the calculation of breeding rabbits in an ideal situation. At a later date, the series is known as the Fibonacci sequence or the Fibonacci numbers.
The sequence is: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, ... and so on.
Trivia quiz for you: what comes after 89? If you answer correctly without asking uncle or aunt Google Wiki, then it looks like you have a great potential to become a reliable teknikalis.
From the series tersebutlah found there is a ratio of the most found in any shape of objects in nature, which is approximately 1: 1618 or 0618: 1. This ratio is then referred to as the "golden ratio".
That little saga Fibonacci. Okay, you'll get out of all this mathematical complexity ... (Finally!)
In application of the Trading: Fibonacci Retracement
Relax, you did not need to calculate Fibonacci ratios in trading practices. We use trading platform (Metatrader) has provided a tool that helps us to apply the knowledge heritage of this Fibonacci instantly. The name of the tool is the Fibonacci Retracement.
Traders use levels provided by Fibonacci Retracement to help determine the range of potential areas as support and resistance. This tool can be put to good use when the market is in a state of "trending", be it the current up trend or down trend. The basic concept of the use of Fibonacci retracement is looking for opportunities to buy is the price is in the range of support. Instead, you can look for opportunities to sell is the price is in the range of resistance derived from the Fibonacci retracement.
To be able to find the retracement levels, you must first find the terlabih dots significant highs and lows. These points are what we call "swing high" and "swing low".
At the time of the movement in the up trend, all you do is draw Fibonacci retracement from the swing low to swing high as seen in the image below.
Instead, the movement in the current down trend, all you do is draw Fibonacci retracement from the swing high to low swing as seen in the image below.
Seen
in the second picture above that Fibonacci levels that we use in
trading is the level of 0.0%, 23.6%, 38.2%, 50.0%, 61.8%, 76.4% and
100.0%. Levels that we use as a reference tool to determine areas of support and resistance.By
using Fibonacci retracement of this, you can also take some level to
which you make reference area would be useful to determine the level of
entry. Popular levels are 38.2%, 50.0% and 61.8%. In the range of these levels often buy or sell signal appears that its accuracy is quite high.Fibonacci retracement levels is actually the levels of support and resistance. Thus, the reference area to look for a sell signal is actually a resistance area. Thus, the reference area to look for a buy signal is actually a support area.The strategy is similar to trading bounce, or more precisely: swing trading. You wait for a pullback to the reference area and find out if there is a confirmation signal to buy or sell. However, because you have not learned a buy or sell signal, for while you are using Fibonacci retracement first. When the price movement stuck in the reference area, then you can try to sell or buy.Now, let's look at the price movement chart application.
Strategy Buy
As already mentioned, you can use Fibonacci reference area to look for a buy level. Of course, you do the time up trend. Below are examples of graphs based on the movement of GBP / USD. You will learn the practice of the strategy of buy using the reference area based on the Fibonacci retracement. You are ready? Should be.
In
the above example you have to draw a Fibonacci retracement to the
reference swing low at 1.6271 (100.0%) and the swing high at 1.6592
(0.0%). Reference
area where you will try to find confirmation of reflection which is a
signal to buy for you, there are three levels of retracement, ie: 1.6469
(38.2%), 1.6431 (50.0%) and 1.6394 (61.8%). The third level is support.
You wait till the price of admission to the reference area. Best level to Buy is around 61.8%, but there are times when you get a confirmation reflection of around 50.0%.Well, now you can see that the price repeatedly attempted to break the level 1.6394 (61.8%). The level looks "tested" up to four times, but always candlestick closed above 1.6394. This is a sign that the support was strong and this is when you do buy, around 1.6431. The target is the 1.6592 level (0.0%), while the anticipation is in the exit point (1) is 1.6347 or exit poit (2) at 1.6271. So if the price turned out to go down, you will loose your long position in either of those levels.
Why should there be exit points? To anticipate if the market turns the other wills, which is contrary to your forecast. Keep in mind that there is no technical analysis is 100% correct. Technical analysis only help you to approach the truth. Well, so what then? Later, at a higher grade level, you will also learn about risk management and capital management, which, when combined with a good knowledge of technical analysis will menjdi powerful weapons in trading. Spirit!
Why are there two exit points? Because often break the level of 76.4% is an early indication that the trend will change direction, so that a lot of traders who choose to "play it safe" by taking off their positions after this level breaks (break). However, confirmation of changes in trend direction (reversal) is actually the level of 100.0%, making the trader more "daring" opt break of these levels as they exit points. So, this is probably more to the style and power of capital.Okay we now see what happens in the GBP / USD once you do buy.Turns GBP / USD rising and your target is reached! Beautiful is not it?
Sell strategy
This strategy is actually just the opposite of the strategy of buy. If the strategy of buy done at up trend, then sell this strategy dilaksakanan during the down trend.Below is a graph of the movement of GBP / USD.
At this time you wait for a pullback happen to sell the reference area in the range between 1.6619 (38.2%) to 1.6718 (61.8%). In the middle there is a level 50.0% at the level of 1.6668. Remember yes, this is the third level and the resistance level of your reference area was actually a resistance area.
Now a pullback has occurred and you can see that the price has been in the reference area. Note that the price was not able to break above the 1.6718 level (61.8%), even are down and breaks below 1.6668 (50.0%). This is a signal that you should do a sell with a target at 1.6458 level (0.0%). Do not forget, the anticipation is at exit points (1) at 1.6780 or (2) at 1.6879, if it turns out your estimate is wrong.Now, let's see what happens next ....Price GBP / USD down and your target is reached ..Yep, a wonderful day ....Nevertheless, it does not mean we can only do sell or buy at the level of 61.8% only. Sometimes, at the level of 76.4% we are still able to buy or sell.
Now a pullback has occurred and you can see that the price has been in the reference area. Note that the price was not able to break above the 1.6718 level (61.8%), even are down and breaks below 1.6668 (50.0%). This is a signal that you should do a sell with a target at 1.6458 level (0.0%). Do not forget, the anticipation is at exit points (1) at 1.6780 or (2) at 1.6879, if it turns out your estimate is wrong.Now, let's see what happens next ....Price GBP / USD down and your target is reached ..Yep, a wonderful day ....Nevertheless, it does not mean we can only do sell or buy at the level of 61.8% only. Sometimes, at the level of 76.4% we are still able to buy or sell.
We have to consider is not to the level of 76.4% translucent. This level is often referred to as level "critical". If this level breaks, then the tendency will happen reversal (reversal), no longer a correction. In the picture above, although the upper shadow of the candlestick has exceeded the level of 76.4%, but in fact its closing price is still below the level of 76.4%, so that this level can not be considered transparent.
Indeed Fibonacci retracement application looks easy. Well, now that it is also necessary to note that in fact is not that easy. Most errors occur when determining the swing high and swing low. Therefore, it needs a careful observation and exercises to hone your acumen to recognize swing high and swing low. Also, the patience to await confirmation in the reference area is absolutely necessary to be able to practice this theory very well.
Do not forget ... To practice this theory, you should use a demo account first.
Indeed Fibonacci retracement application looks easy. Well, now that it is also necessary to note that in fact is not that easy. Most errors occur when determining the swing high and swing low. Therefore, it needs a careful observation and exercises to hone your acumen to recognize swing high and swing low. Also, the patience to await confirmation in the reference area is absolutely necessary to be able to practice this theory very well.
Do not forget ... To practice this theory, you should use a demo account first.
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