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Fibonacci Trading Strategies Guide

The document provides guidelines for using Fibonacci retracement levels when trading currencies. It recommends using Fibonacci on currency pairs that have a clear upward or downward trend with visible retracement periods. For rising trends, Fibonacci retracement is drawn from a significant bottom to the highest top, with levels below the current price representing support. For falling trends, it is drawn from a significant top to the lowest bottom, with levels above the current price acting as potential resistance. Fibonacci extensions follow the same approach but are used when the opposite wave exceeds the initial wave. Retracement levels indicate trade entry points while extensions flag profit targets.

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Laksh Ramesh
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206 views5 pages

Fibonacci Trading Strategies Guide

The document provides guidelines for using Fibonacci retracement levels when trading currencies. It recommends using Fibonacci on currency pairs that have a clear upward or downward trend with visible retracement periods. For rising trends, Fibonacci retracement is drawn from a significant bottom to the highest top, with levels below the current price representing support. For falling trends, it is drawn from a significant top to the lowest bottom, with levels above the current price acting as potential resistance. Fibonacci extensions follow the same approach but are used when the opposite wave exceeds the initial wave. Retracement levels indicate trade entry points while extensions flag profit targets.

Uploaded by

Laksh Ramesh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Basic Fibonacci Rules in Trading

1. Use Fibonacci on those currency pairs that have a clear trend.

This means that you should use Fibonacci in a rising or downward trend, but you should skip these
currency pairs whose movement are not clear or it’s in sideways trend.
2. Find a nice retrace which movement you want to predict.

Retrace is a small price movement which is opposite to the main trend, so it’s considered just a
small opposite trend that should be stopped and the price will continue in the direction of the initial
trend. Skip those currency pairs that have no retrace.
3. In the rising trend, Fibonacci retracement always starts from left to right, from a
significant bottom to the highest top in the observed trend.

Each level of the Fibonacci retracement that is below the current price represents the levels
of support from which we expect the price will continue to rise.

4. In a downward trend, the Fibonacci retracement always starts from left to right, from
a significant top to the lowest important bottom.

Each level of the Fibonacci retracement that is above the current price represents the
potential resistance from which we expect the price to decline and continue in the
downward direction.
5. Fibonacci extensions are used in the same way as the Fibonacci retracement, but in a
situation where the opposite wave exceeds the bottom of the initial wave.

6. Fibonacci retracement levels are mostly used as levels at which traders open their
trades, while Fibonacci extension levels are usually used as potential profit targets.
(explained in lesson “Fibonacci Extension Levels”)

7. You can use this tool on all time frames, and of course on all financial instruments,
and even on very volatile ones such as cryptocurrencies.

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