FIBONACCI
HISTORY
HISTORY
Fibonacci, also known as Leonardo Bonacci, Leonardo
of Pisa, or Leonardo Bigollo Pisano, was an Italian
mathematician from the Republic of Pisa, considered
to be "the most talented Western mathematician of
the Middle Ages“.
Types of Fibonacci
1. FIBONACCI RETRACEMENT
2. FIBONACCI EXTENSION
FIBONACCI SEQUENCE
FIBONACCI SEQUENCE
The sequence of numbers, starting with zero and
one, is created by adding the previous two numbers.
The ratios arise from the following number series: 0,
1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89,144, 233, 377, and so
on.
After the first few numbers in the sequence, if you
measure the ratio of any number to the succeeding
higher number, you get .618.
FIBONACCI LEVELS
FIBONACCI RETRACEMENT LEVELS
• 0.236 , 0.382, 0.5
• 0.618 , 0.786, 1
FIBONACCI EXTENSION LEVELS
•
•
•
•
•
•
0
0.382
0.618
1
1.382
1.618
FIBONACCI RETRACEMENT
FIBONACCI RETRACEMENT
• After a big price moves in one direction, the price
will retrace or return partway back to a previous price
level before resuming in the original direction.
• Traders use the Fibonacci retracement levels as
potential support and resistance areas.
• Traders use the Fibonacci extension levels as profit
taking levels.
• In order to apply Fibonacci levels to your charts, you’ll
need to identify Swing High and Swing Low points.
FIBONACCI RETRACEMENT
How to use FIBONACCI RETRACEMENT
• Fibonacci retracement levels are horizontal
lines that indicate the possible support and
resistance levels where price could potentially
reverse direction
• Fibonacci retracement levels are considered a
predictive technical indicator since they
attempt to identify where price may be in the
future
FIBONACCI RETRACEMENT
Finding FIBONACCI RETRACEMENT Levels
• In order to find these Fibonacci retracement levels,
you must find the recent significant Swing Highs and
Swings Lows.
FIBONACCI RETRACEMENT
FIBONACCI RETRACEMENT
FIBONACCI RETRACEMENT
FIBONACCI RETRACEMENT
What happens when FIBONACCI RETRACEMENT fail?
Fibonacci retracements do NOT always work. They are not
foolproof.
FIBONACCI RETRACEMENT
FIBONACCI RETRACEMENT
LESSON:
• Fibonacci retracement levels give you a higher
probability of success, like other technical tools, they
don’t always work. You don’t know if price will
reverse to the 38.2% level before resuming the trend.
• Sometimes it may hit 50.0% or the 61.8% levels
before turning around.
• Remember, the market will not always resume its
uptrend after finding temporary support or
resistance, but instead continue to go past the recent
Swing High or Low.
FIBONACCI RETRACEMENT
FIBONACCI RETRACEMENT + SUPPORT and RESISTANCE
• One of the best ways to use the Fibonacci
retracement tool is to spot potential support
and resistance levels and see if they line up
with Fibonacci retracement levels.
• If Fibonacci levels are already support and
resistance levels, and you combine them with
other price areas, then the chances of price
bouncing from those areas are much higher.
FIBONACCI RETRACEMENT
FIBONACCI RETRACEMENT + SUPPORT and RESISTANCE
FIBONACCI RETRACEMENT
FIBONACCI RETRACEMENT + SUPPORT and RESISTANCE
FIBONACCI RETRACEMENT
FIBONACCI RETRACEMENT + SUPPORT and RESISTANCE
FIBONACCI RETRACEMENT
FIBONACCI RETRACEMENT + TREND LINE
FIBONACCI RETRACEMENT
FIBONACCI RETRACEMENT + TREND LINE
FIBONACCI RETRACEMENT
FIBONACCI RETRACEMENT + TREND LINE
FIBONACCI RETRACEMENT
FIBONACCI RETRACEMENT + CANDLESTICKS
• When combining the Fibonacci
retracement tool with candlestick
patterns, we are looking for exhaustive
candlesticks.
• If you can tell when buying or selling
pressure is exhausted, it can give you a
clue of when price may continue
trending.
FIBONACCI RETRACEMENT
FIBONACCI RETRACEMENT + CANDLESTICKS
FIBONACCI RETRACEMENT
FIBONACCI RETRACEMENT + CANDLESTICKS
FIBONACCI RETRACEMENT
FIBONACCI RETRACEMENT + CANDLESTICKS
FIBONACCI RETRACEMENT
FIBONACCI RETRACEMENT + CANDLESTICKS
FIBONACCI EXTENSIONS
HOW TO USE FIBONACCI EXTENSIONS
• Fibonacci extension is a tool that traders can
use to establish profit targets or estimate how
far a price may travel after a
retracement/pullback is finished.
• Extension levels are also possible areas where
the price may reverse.
• Fibonacci extensions measure the impulse
waves in the direction of the trend.
FIBONACCI EXTENSIONS
HOW TO USE FIBONACCI EXTENSIONS
FIBONACCI EXTENSIONS
HOW TO USE FIBONACCI EXTENSIONS
FIBONACCI EXTENSIONS
HOW TO USE FIBONACCI EXTENSIONS
FIBONACCI EXTENSIONS
HOW TO USE FIBONACCI EXTENSIONS
FIBONACCI EXTENSIONS
LIMITATIONS:
• There is no way to know which exact Fibonacci
extension level will provide resistance. Any of
these levels may or may not act as support or
resistance.
• Determining which Swing Low to start from in
creating the Fibonacci extension levels.
• You will have to use your discretion in using the
Fibonacci extension tool. You will have to judge
how much longer the trend will continue.
FIBONACCI and STOP LOSS
Place Stop Loss just pass the next Fibonacci Level
FIBONACCI and STOP LOSS
Place Stop Loss just pass the next Fibonacci Level
• The problem with this method of setting stops
is that it is entirely dependent on you having a
perfect entry.
• Setting SL just past the next Fibonacci
retracement level assumes that you are
confident that the S/R area will hold.
• The market might shoot up, hit your stop, and
eventually go in your direction.
FIBONACCI and STOP LOSS
Place Stop Loss past recent Swing High/Low
• When the price is an uptrend and you’re in a
long position, you can place a stop loss just
below the latest Swing Low which acts as a
potential support level.
• When the price is in a downtrend and you’re
in a short position, you can place a stop loss
just above the Swing High which acts as a
potential resistance level.
FIBONACCI and STOP LOSS
Place Stop Loss past recent Swing High/Low
KEY TAKEAWAYS
 Fibonacci retracement levels connect any two
points that the trader views as relevant, typically
a high point and a low point.
 The percentage levels provided are areas where
the price could stall or reverse.
 The most used ratios include 23.6%, 38.2%, 50%,
61.8%, and 78.6%.
 The levels that seem to hold the most weight are
the 38.2%, 50.0%, and 61.8% levels.
KEY TAKEAWAYS
 Fibonacci retracement levels can be viewed as
potential support and resistance areas.
 Like the retracement levels, the key Fibonacci
extension levels are: 38.2%, 50.0%, 61.8%, as
well as the 100%, 138.2% and 161.8%
extensions.
 Traders use the Fibonacci extension levels as
potential support and resistance areas to
set profit targets.
KEY TAKEAWAYS
 The Fibonacci extensions show how far the
next price movement could move following a
pullback.
 A Swing High is a candlestick with at least two
lower highs on both the left and right of itself.
 A Swing Low is a candlestick with at least two
higher lows on both the left and right of itself.
CHEAT SHEET
 0.382 – Most common Fibonacci Retracement
Level. Price will often come back just to test
this level before continuing its trend. This level
tends to indicate a strong and healthy trend.
 0.500 – This level is important even though it
is not a technical Fibonacci level. Price tends
to respect the 38.2 and 61.8 more then this
level, but this level can be a strong psyche
barrier for price.
CHEAT SHEET
 0.618 – Most popular retracement level for
entries due to the risk to reward ratio given by
this deep retracement – continuation
opportunity. Slower but steady trend
continuation compared to 38.2%.
 0.786 – Useful for its indication of a potential
harmonic pattern. A pullback to this point
indicates that the trend is weakening, and you
should take caution.
CHEAT SHEET
 -0.272 – The negative 27.2% is a Fibonacci
extension level, which functions to indicate
continuation targets. Price will often react
strongly from this level and potentially
reverse. This is the conservative target.
 -0.618 – This functions to indicate
continuation targets. Price will often react
strongly from this level and potentially even
reverse entirely. This is the aggressive target.
DISCUSSION
END