The Basics of Fibonacci retracement tool.
Fibonacci retracement tool basically used to identify a better support and resistance levels.
Trendline tool indicator
All cash and future markets (please note: – this tool not for options market)
All markets and all time frame like 1week, 1day, 1hour, 30min, 15min, 5min etc.
Fibonacci retracement tool measured a distance between the start trend and end of the trend. Then this tool gives you retracement level golden levels is: – 38.2%, 50%, 61.8% after this retracement possibility is market moves again with a market actual trend. If market not respected 61.8% support and resistance its mean possibility is market over previews trend and its start a new trend.
The golden levels of Fibonacci retracement tool are 38.2%, 50%, 61.8% (Square root of .618)
Fibonacci retracement tool sequence number start with 1 and any number in this Fibonacci sequence sum the two number’s for example (1, 1, 2, 3, 5, 8, 13, 21, 34, 55 …………..). This calculation showing you any two consecutive starts out by oscillating around .618 golden ratio.
After this information, you already know about for Fibonacci is a very effective tool. This tool gives you good retracement targets with support and resistance levels. See on the chart for practical example.
Bearish market condition
This chart shows you a one-day time frame for the sbi bank stock. Market down (315 to 280) only in 7 days after market retrace to approx. (295) 38.2% Fibonacci level than market down again.
Bullish market condition
This chart shows you a one-day time frame for the sbi bank stock. Market up (265 to 315) after two-month market start retrace and market down approx. (285) 61.8% Fibonacci level than market up again.
For better understanding Fibonacci retracement tool please visit on trading chanakya youtube channel click button and watch the video now.