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HOW TO PROPERLY USE FIBONACCI /fibonacci retracements, extensions and projections FIBONACCI PRICE RELATIONSHIPS We start by running three different types of Fibonacci price relationships to find our trade Pattern. These are retracements, extensions, and price projections or price objectives. Each of these price relationships will be setting up potential support or potential resistance in the chart you are analyzing. The definition of support is a price area below the current market where you will look for the possible termination of a decline and where you would consider being a buyer of whatever market you are analyzing. You might be looking to buy at or around support either to initiate a new trade on the long side or to exit a short position if you think the support may hold and the market won’t decline any further. The definition of resistance is a price area above the current market where you would look for the possible termination of a rally and consider being a seller. You might be looking to sell at or around Resistance to initiate a new trade on the short side or to exit a long position if you think the resistance may hold and the market won’t go any higher. Primary and derivative retracements ratios: Fibonacci price retracements are run from a prior low-to high swing using the ratios 0.382, 0.50, 0.618, 0.786, 88.6 to identify possible support levels as the market pulls back from a high. Retracements are also run from a prior high-to-low swing using these same ratios, looking for possible resistance as the market bounces from a low. Most basic technical analysis packages will run the retracement levels for you when you choose the swing you want to run them from and select the proper Fibonacci price tool within the program you are using. Tradingview provide such amazing tool. Primary retracemets are 0.382, to 61.8 following by derivatives 786 and the 886.
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