A fibonacci forex calculator is simply a trading tool that helps traders calculate the fibonacci extension and retracement levels of the market price. It calculates the potential support and resistance levels in the trend you are following. To use the fibonacci calculator, you are expected to enter the swing high and swing low, and the calculator will generate the fibonacci retracement value.
To understand more about the fibonacci calculator, you will agree with me that terms like “retracement levels”, “support” and resistance”, “swing high”, and “swing low” has to be understood. Here is a breakdown of these terms to help you better understand what the fibonacci calculator is all about.
- WHAT IS “SUPPORT AND RESISTANCE”?
The support and resistance concept forms the basis of the forex technical analysis. This concept is very wide and versatile that sometimes, it can be use in ways that seem entirely unrelated in the eyes of the layman. Simply put, resistance is the highest level a market price can reach in an already established zigzag market pattern before it start to go down. On the other hand, support is the lowest a market price can get before it starts moving up in an already established zigzag pattern. With a fibonacci calculator, a trader can calculate the potential support and resistant level of a market price; and open positions in ways to take advantage of it.
- WHAT IS “SWING HIGH”?
Swing high is a term used in technical analysis to refer to the peak reached by an indicator. In other words, it is the highest point a market price gets to before it start to move down in a zigzag pattern (resistance). The swing high value is important in finding the fibonacci retracement value with the fibonacci calculator.
- WHAT IS “SWING LOW”?
Just like the swing high, swing low is a term used in technical analysis to refer to the trough (lowest point) reached by the market price of a security. As the swing high represents the resistance, the swing low represents support. Together with other vital information, the swing low when entered into the forex fibonacci calculator produces the retracement value.
- WHAT IS RETRACEMENT LEVEL?
The retracement level is the end result of the forex fibonacci calculator. It is a temporal reversal in the direction of the price of a security. It shows the changes in rice that a security experiences during its overall upward trend. This means that for every swing low, there is a swing high that is higher than the previous swing high, causing the price of the security to keep on in the upward trend direction.