InvestorQ : What is understood by Fibonacci Arc Retracement and how is it used in practice by chartists and by traders?
shrinidhi Rajan made post

What is understood by Fibonacci Arc Retracement and how is it used in practice by chartists and by traders?

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Riya Dwivedi answered.
2 years ago
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Basically the Fibonacci arcs are used to identify the appropriate support and resistance levels to trade a series of price movements that may not be in tandem with the broader trend that is calculated. The Fibonacci retracement tool plots percentage retracement lines based upon the mathematical relationship within the Fibonacci sequence. These retracement levels provide support and resistance levels that can be used to target price objectives. Traders frequently and extensively use the Fibonacci arcs to identify crucial supports and resistances. The supports re used to initiate the trade and also to place stop losses on the long side. The resistances, on the other hand, are used to initiate trades and also to place stop losses when you are trading on the short side.

Fibonacci Retracements are displayed by first drawing a trend line between two extreme points. A series of six horizontal lines are drawn intersecting the trend line at the Fibonacci levels of 0.0%, 23.6%, 38.2%, 50%, 61.8%, and 100%. The Fibonacci arc values closely correspond to the original Fibonacci values with the only difference being that the arcs are more smoothened versions of the raw Fibonacci numbers.

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