| Fibonacci analysis has become an essential tool to the | | | | faith and rely on the consistent and dependable |
| modern trader. Some traders may be skeptical | | | | history of the Fibonacci indicator. |
| regarding the unique and slightly abstract way | | | | One could subscribe to that belief but the truth is, |
| Fibonacci retracements and extensions analyze the | | | | even very old price charts reveal an amazingly |
| market but ultimately all a trader needs to be aware | | | | accurate Fibonacci relationship. |
| of is whether they are reliable and accurate. | | | | When deployed properly the Fibonacci retracements |
| The resounding answer to this question is yes and | | | | and extensions predict significant lines of support and |
| this is why Fibonacci analysis has become one of the | | | | resistance of any security being analyzed. The |
| most popular indicators available to traders. The | | | | retracements and extensions are laid over the top of |
| principle use of Fibonacci retracements and | | | | a candlestick chart and if done accurately the |
| extensions is to project strong lines of resistance and | | | | resistance and support can be clearly seen. The price |
| support for a security. Armed with these indications a | | | | of a security is likely to either rebound when it hits |
| trader can employ a basic but often successful | | | | one of these lines or pass it and if it breaks the |
| trading technique by placing pending entries into the | | | | support or resistance it is likely to keep on going. This |
| market. | | | | is valuable knowledge for a trader and with a basic |
| The Fibonacci sequence should technically have no | | | | technique large profits can be made by playing the |
| effect on the world of trading but it does. This is | | | | market with this information. |
| largely believed to be because so many traders use | | | | If a trader is analyzing the current price of a security |
| Fibonacci analysis that they abide by the projections | | | | they can use the resistance and support lines, as |
| it makes. | | | | projected by the Fibonacci analysis, to form a |
| This causes the large majority of traders to make | | | | number of market tactics. |
| decisions based on the evidence presented by the | | | | For example if there is a strong line of support a |
| Fibonacci retracements and extensions and as a | | | | trader should place pending buy with the intention |
| consequence the market will move in the direction | | | | that the price hits that buy and rebounds and makes |
| suggested by the analysis. | | | | profit. If the price breaks the support a trader should |
| Essentially traders all over the world are following the | | | | place a stop loss to ensure that no significant |
| rules laid out by the Fibonacci analysis and this causes | | | | amounts of money are lost. |
| the market to move in the predicted directions | | | | Alternatively a trader could place a pending buy |
| anyway and this makes the Fibonacci analysis a form | | | | above a resistance line. This could ensure that if the |
| of self-fulfilling prophecy. | | | | price breaks the resistance the buy will be triggered |
| The reasons behind the accuracy and reliability of | | | | and it is likely the price will keep on rising. There are a |
| Fibonacci retracements and extensions is largely | | | | number of similar variations to this technique a trader |
| irrelevant because all a trader needs to do is have | | | | can take advantage of with Fibonacci analysis. |