| Fibonacci retracements and extensions are known to | | | | demonstrates to a trader that entering the market |
| be fairly reliable indicators when used on their own. | | | | at this point may not be a wise idea because there is |
| Often they can accurately predict the support and | | | | a significant degree of uncertainty present. |
| resistance lines throughout the trend of a security | | | | Fibonacci retracements and extensions can be used in |
| and this can help determine price targets which, if | | | | conjunction with candlestick patterns to help provide |
| used correctly, can help a trader make a large profit. | | | | more compelling evidence when a trader is |
| However, as is the case with any indicator the best | | | | considering entering and exiting a market. Candlestick |
| results are usually accrued when a combination of | | | | patterns are arguably the most basic form of |
| indicators are used to provide more substantial | | | | indicator available to a trader but this does not make |
| evidence. Fibonacci retracements and extensions can | | | | them irrelevant or a waste of time. When used |
| be used in conjunction with well-known candlestick | | | | correctly, certain candlestick patterns are known to |
| patterns and if employed successfully the two | | | | be incredibly reliable and can accurately predict price |
| indicators can predict price reversals that are likely to | | | | reversals or trend continuations. One particular |
| occur if a security hits a line of resistance or support. | | | | candlestick pattern that is well known for its |
| Commonly, traders will always use a combination of | | | | consistency and reliability is the doji star. This occurs |
| indicators to help them make decisions on when to | | | | when the price of a security opens and closes at the |
| enter and exit the market. Relying on any one | | | | same point over a specific period. As the name |
| particular indicator can be limiting and often it does | | | | suggests, the candlestick resembles a cross shaped |
| not provide substantial enough evidence to make | | | | star as opposed to a candlestick and when this is |
| crucial decisions. By combining indicators with a | | | | witnessed a trader can be confident that a price |
| Fibonacci retracement or extension a trader can be | | | | reversal is likely to occur. |
| much more certain when making a foray into the | | | | The doji star candlestick pattern can be used |
| market because they will be provided with evidence | | | | together with a Fibonacci retracement and extension |
| from two separate sources. Using Fibonacci | | | | to predict price reversals at significant points of |
| retirements and extensions in conjunction with other | | | | support or resistance. For example if a point of |
| indicators increases a trader's chances of success | | | | resistance has been highlighted by a Fibonacci |
| significantly because if two or more indicators are | | | | retracement a trader should look for a doji star as |
| suggesting the same move in the market it is likely | | | | the price nears the resistance. This will confirm if the |
| to happen. Conversely if one indicator is suggesting | | | | price is likely to rebound or if it is likely to break |
| the market will move up whilst another indicator is | | | | through the resistance and carry on. If it seems the |
| suggesting the market price will move down, this | | | | price will rebound a trader should place a sell. |