How to use Fibonacci retracement
Fibonacci retracement :- Fibonacci retracement is a popular technical analysis tool used in the s tock market to identify potential levels of support and resistance. It is based on the Fibonacci sequence and the Golden Ratio, which is approximately 1.618. Traders and analysts use Fibonacci retracement levels to determine areas where the price of a stock or other financial instrument may reverse or consolidate before continuing its trend. Here's how Fibonacci retracement is applied in the stock market: Identify the Trend: First, you need to determine the prevailing trend in the stock. This can be an uptrend (higher highs and higher lows) or a downtrend (lower highs and lower lows). Select Swing Points: Identify significant swing points within the trend. A swing high is a peak, and a swing low is a trough. These swing points should be clear and well-defined. Measure the Fibonacci Levels: Using a Fibonacci retracement tool, apply it to the swing points. The tool will draw horizonta...
