makes use of only.618.1618 levels. Plotting the Fibonacci extension tool is a bit different as it takes into account 3 swing points. To plot the Fibonacci levels, follow the steps below. What are they and how to use them?
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If you observe closely, notice how after price crossed the.618 Fib time zone level price was in a short term downtrend and after crossing the.618 Fib timezone level, price started to rally. Despite various texts that tend to depict Fibonacci tools as an independent indicator, using them together offers a much clearer perspective of the markets. To plot the Fibonacci time zones, simply connect two highs or two lows. Notice the swing points that were selected. The most rcfx forex penang commonly used Fibonacci tools are: Fibonacci Retracement Tools, fibonacci Extension Tools, fibonacci time zone tools. When combined with other price action trading methods such as support/resistance, trend lines and so on, the Fibonacci set of tools can offer an alternative way of trading the markets. As we see from the above example, using the Fibonacci retracement tool along with the expansion or extension tool gives a more probable trade bias. If we use only the Fibonacci retracement tool, it wouldnt have given us anything much as to where price could reach. There are many instances where price breaks any of the Fibonacci levels and continues in the direction of the previous trend momentum. In the chart above we have plotted the Fibonacci retracement tool to an uptrend by plotting the tool from the bottom swing low to the left to the upper swing high on the right. But when we apply the extension tool, we get a key price level.618 of the Fibonacci extension tool. This in itself becomes a self full-filling prophecy rather than having to do anything magical or mystical about.
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