The price retracement levels can be applied to the price bar chart of any market by clicking on a significant Swing Low and dragging the cursor to the most recent potential Swing High and clicking there.  This will display each of the Retracement Levels showing both the ratio and corresponding price level.  Let’s take a look at some examples of markets in an uptrend.  The same points made by these examples are equally applicable to markets in a downtrend.

Fibonacci Retracement trading is used in all markets – online stock trading, Fibonacci Forex trading and also in the futures markets.

Whether or not one believes the Fibonacci trading numbers have any special significance, the fact that they are so pervasively used creates a self-fulfilling prophecy to the levels. Thus, for whatever reason you choose to believe, Fibonacci retracement levels are an important part of technical analysis and should be incorporated into your trading system.

Using Fibonacci retracements in your trading will not make you a professional swing trader, day trader or investor overnight. But used in conjunction with other technical analysis tools such as stochastics, RSI, MACD, moving averages, candlestick patterns, etc., they can be a very valuable addition to any traders tool box.

Another powerful aspect of Fibonacci trading is that the retracement levels are robust. They can be used in day trading, swing trading and investing all markets: Forex, stocks, futures and commodities. Their measurements are relative and adjust to whatever market and time frame you are using in your Forex, futures or stock market analysis.

Enjoy the video below on Fibonacci retracement levels. It provides a good introduction to the topic, but was also created to answer the most common questions I receive about Fibonacci trading.
Example 1:  Here we plotted the Fibonacci Retracement Levels by clicking on the Swing Low at about $71.31 and dragging the cursor to the Swing High at about $89.83.  You can see the resultant levels plotted by the software.  Now the expectation is that if the market retraces from this high it will find support at one of the Fibonacci Levels, because traders will be placing buy orders at these levels as the market pulls back.

Example 1.1:  Now let’s look at what actually happened after the Swing High occurred.  The market pulled back right through the 0.236 level and continued the next day through the 0.382 level before finding support.  After a few days, the market resumed its upward move.  Clearly buying at the 0.382 level would have been a good short term trade.

Courtesy Copyright The Truth About Fibonacci Trading .This content copyrights protected  Written by Bill Poulos.