How to Use Fibonacci Retracements?
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Fibonacci Retracement may be a method of technical analysis for determining support and resistance levels. It is named after the utilization of the Fibonacci sequence series. It is also based on the idea that markets will retrace a predictable portion of a move, after which they will continue to move in the original direction.
Fibonacci Retracements are ratios used to identify potential reversal levels, and the most popular Fibonacci Retracements are 61.8 percent and 38.2 percent.
The Fibonacci retracement tool plots percentage retracement lines based upon the mathematical relationship within the Fibonacci sequence series. These retracements are often combined with other indicators and price patterns to make an overall strategy.
Buy Signal:-
Entry
– RSI (14): RSI should be below 50 marks.- Fibonacci Retracement: Prices should be in between 50 percent – 61.8 percent fib retracement levels.- SMA(14): candle close should be above 14 SMA.- Trend: Uptrend (Higher high and Higher low)
Exit
– One can use multiple ways to book profit & exit, like RSI near 85 or prices below 14 DMA or 100 percent Fibonacci retracement.
Sell Signal:-
Entry
– RSI (14): RSI should be above 50 marks.- Fibonacci Retracement: Prices should be in between 50 percent – 61.8 percent fib retracement levels.- SMA(14): candle close should be below 14 SMA.
– Trend: Downtrend (Lower high and Lower low)
Exit
– One can use multiple ways to book profit & exit, like RSI near 15 or prices above 14 DMA or 100 percent Fibonacci retracement.
