A Fibonacci calculator is said to be a forex widget or tool that is used to create opportunities to maximize profit by getting a forex trader to know where to set a profit target in charts. A Fibonacci calculator has both the retracement and extension tools. The calculator generates level of retracement and extension for its user. The use of both the retracement and extension tool depends on a trader’s ability to trace the tools on the chart which is by identifying the high and low swings of prices.
CORRELATION BETWEEN FIBONACCI CALCULATOR AND RETRACEMENT
Fibonacci retracement is a technical analysis method used in the determination of resistant and support levels. It is based on the fact that a particular market will undergo a retrace in a predictable portion of movement after which they will be seen to undergo an ordinary directional movement. The form of Fibonacci retracement is seen to be an ordinary volatility in price which is created by taking two extreme point in the Fibonacci chart and dividing the vertical distance by the key Fibonacci ratio where 0.0 percent is mentioned as the starting point of the retracement and 100 percent is the complete reversal to the original part of the movement. Horizontal lines are used to identify various levels of support and resistance.
Forex traders make use of the Fibonacci calculator as a retracement tool which aids in the determination of small price corrections and in the identification of support areas and resistance. These retracements are ratios based on the sequence of Fibonacci which is used to guess the extent of corrections in a normal forex market wave. It is also used to determine forex market pullbacks or continuation patterns.
A Fibonacci calculator can also be employed in breakout strategies by forex traders to locate exit and entry trade positions if a retracement is proven to be an effective support or resistance level within a security’s historical price pattern.
Fibonacci retracement is a quality tool in Fibonacci calculator used by technical traders in the identification of strategic points and places for transactions, target price and stop losses which helps forex traders to encounter good price positions in the forex market. After an eloquent movement seen in price which are either upward movements or downward movements, new support and resistant level are being displayed by these Fibonacci Retracement.
On like other Fibonacci calculator tools, all the price levels of Fibonacci retracement are static in nature and do not change. This fact helps in simple identification of price levels by forex traders and investors when tested. Since theFibonacci retracement levels are points of inflection, some level of price actions such as a break or a rejection are also expected by the traders. The Fibonacci retracement level of 0.618 is the most used by stock analysis which is approximated to the golden ratio.
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