Fibonacci Retracement Strategy in Forex Trading

Fibonacci retracement is a popular technical analysis tool used to identify potential support and resistance levels in the forex market.

What Is Fibonacci Retracement?

Fibonacci retracement levels are based on mathematical ratios derived from the Fibonacci sequence. Common levels include 38.2%, 50%, and 61.8%.

How Traders Use Fibonacci Levels

Traders apply Fibonacci retracement to recent price swings to identify potential pullback areas.

Combining Fibonacci with Other Tools

Fibonacci works best when combined with trendlines, support and resistance, or candlestick patterns.

Risk Management

Stop-loss placement beyond Fibonacci levels helps limit losses if the market moves unexpectedly.

Conclusion

Fibonacci retracement provides valuable insights into market structure and potential trading opportunities.