| Fibonacci Trading describes the use of Fibonacci | | | | In a situation such as this a trader can use Fibonacci |
| retracements and extensions, a fantastic way to | | | | clusters as a solution. Clusters are very simple to |
| gather accurate data on crucial resistance and | | | | employ and although they may not provide data as |
| support lines. | | | | accurate as a single retracement or extension they |
| Since their introduction into the world of trading, | | | | are very reliable. |
| Fibonacci retracements and extensions have proven | | | | The idea behind Fibonacci clusters is straight forward, |
| to be immensely dependable and reliable and this is | | | | a trader should lay multiple retracements and |
| why they are often deemed priceless by traders. | | | | extensions over a single candlestick chart in order to |
| However laying the retracements and extensions is a | | | | determine where the resistance and support lines are. |
| manual process which is ultimately at the discretion of | | | | This strategy should only be employed when there |
| the trader. This can lead to problems in situations | | | | are lots of high and low prices to choose from and |
| when there a multiple high and low prices and laying | | | | when this is the case a trader should choose several |
| the Fibonacci analysis on top of a candlestick chart | | | | prices and apply the Fibonacci analysis to them. |
| can be inconclusive. | | | | This will help determine average points of resistance |
| In these situations traders can become confused and | | | | and support and is much better than simply guessing |
| feel less confident in their analysis. However by using | | | | two prices and using only one retracement or |
| Fibonacci clusters a trader can counteract this | | | | extension. |
| problem with a solution that is simple and effective. | | | | The result may look a bit confusing because there will |
| Fibonacci Trading in Practical Application | | | | be lots of information on the candlestick chart, but a |
| By projecting the resistance and support lines, | | | | trader should be able to distinguish points where |
| Fibonacci retracements and extensions provide | | | | several retracements or extensions line up and agree |
| invaluable data to a trader. If applied correctly the | | | | on a point of resistance or support. |
| Fibonacci analysis can determine extremely accurate | | | | If this is the case it is very likely these clusters will |
| resistance and support lines but if applied incorrectly a | | | | behave as genuine points of resistance and support |
| trader could create problems. | | | | and they can be relied on by traders. When a price |
| Using Fibonacci analysis incorrectly is a distinct | | | | approaches one of these clusters it should behave as |
| possibility when there are multiple high and low points | | | | expected by either rebounding or breaking through. |
| present on a candlestick chart. In these situations it | | | | This strategy works excellently when a trader is |
| can be hard to decide which two points to choose | | | | uncertain of where to place a retracement or |
| from. | | | | extension, and on the whole it also works accurately |
| Choosing the correct two is very important because | | | | as an indication technique. |
| it has a big impact on where the Fibonacci analysis will | | | | Fibonacci trading is an art, one that can be easily |
| detect resistance and support lines and if done | | | | mastered with a few tips and specific examples. For |
| inaccurately a trader might end up playing the market | | | | a complete free tool set visit our site. |
| to false resistance and support lines. | | | | |