Fibonacci Retracement is a tool that can be used to help entry the market and define targets for taking profits as well as close losing positions. Historically by Fibonanci, price trends tend to find support and resistance at these levels as well. This method was created by an expert in the field of mathematics named Leonardo Fibonacci who formed several areas based on calculation numbers. This calculation is also known as the Fibonacci Sequence where the calculation is quite complex so it will not be detailed in this article. In this article, we will explain how to use Fibonacci Retracement and Extension in technical analysis of Digiasset’s Chart.
In the Fibonacci Retracement there are several number points that are generally used as the basis for determining entry points and price targets. The most common numbers in the fibonacci that trader used : 0.382, 0.5, 0.618, 0.764. How that you know how to read Fibonacci retracement in a chart, let’s continue by showing you how to trade with Fibonacci retracement. In the Bitcoin example below, we selected 2H timeframe and then using Fibonacci retracement to choose the highest and lowest points in this trend ( black arrow). Magically, the market hit 0.382 Fibonacci, then spike up and get a profit.
After that, Fibonacci Strategy are continued with Fibonacci Extensions which are generally used as targets to take profits. The most common numbers in the Fibonacci Extension are 1.000, 1.618, 2.618. For using Fibonacci Extensions as a target, set on your fibo in entry area like black arrow below. For example in this case lets check the market hit target on 1 Fibo and 1.618 Fibo.
Fibonacci in crypto is a powerful tool that can help you determine support and resistance levels, so can be helping your trading strategies. Finally, just like any indicator, you shouldn’t exclusively rely on Fibonacci ratios in trading. They become much more reliable when used in combination with other strategy that match with the trader.
Open a Crypto Trading Account Under 5 Minutes
Open a trading account for your crypto asset in Digiasset. Products traded include Bitcoin (BTC), Ethereum (ETH), Doge, Tether (USDT), Binance Coin (BNB), TRX, JUST and more assets another crypto that is in the top 500 on Coinmarketcap.