Forex Trading: Fibonacci Retracements

September 26, 2008 by Trader Rich

Using Fibonacci retracements can help you on the currency marketOne of the most popular methods of technical analysis in forex trading is the use of Fibonacci retracements. Investopedia describes Fiboancci retracements:

In technical analysis, Fibonacci retracement is created by taking two extreme points (usually a major peak and trough) on a stock chart and dividing the vertical distance by the key Fibonacci ratios of 23.6%, 38.2%, 50%, 61.8% and 100%. Once these levels are identified, horizontal lines are drawn and used to identify possible support and resistance levels.

It can seem daunting to learn these Fibonacci retracements at first, but some practice and study can help you incorporate them into your forex trading strategy.