It is no longer news that the fibonacci numbers are very important in almost all (if not every) walk of life. It is seen everywhere from plants, to arts, and programming, with a lot of other areas of application in between, one of which is forex trading. The application of Fibonacci sequence in forex trading is very useful but at the same time can be a daunting task. Forex on its own has a lot of numbers in it that many find weary. Truth be told, many will not have any business with the forex market if not for the money and the flexibility of it. To make this easier, curious people with the necessary skills came up with the fibonacci calculator which can easily calculate fibonacci numbers for forex trading (or any other thing).

FIBONACCI CALCULATOR AS BEING USED IN THE FOREX MARKET

A fibonacci calculator is simply a tool used in calculating fibonacci numbers or sequence. There are different areas where the fibonacci calculator can be used in the currency exchange business. Some of them are the calculation of

1. The level of support and resistance

2. Trend changes; retracements and extensions

3. Price target

All these are the application of the fibonacci retracement levels in the currency market. For a better understanding of this process, let us take a look at what fibonacci retracement is all about.

FIBONACCI RETRACEMENT AND EXTENSION

Fibonacci a reversal is the direction of a stock price going against the prevailing trend for a small while. They are the small dip in prices that securities naturally experience in an overall upward trend. Fibonacci extension on the other hand is used in fibonacci retracements to predict resistance and support in the market.

The fibonacci calculator is a trading tool that functions based on the key numbers in the Fibonacci sequence. The point of focus and importance here is not the sequence itself, but the mathematical relationship that exists between the numbers as expressed in ratios – the fibonacci ratios. The important levels are at 23.6%, 38.2%, 50%, 61.8%, and 100%. These levels are used to identify possible support and resistance in a forex chart. All that need to be done is to run the values at these levels in the calculator produces the levels of anticipates support and resistance in a trending market.

The very understanding of these ratios has elided many but they seem to work really well in the stock and forex market, just like they are in nature.

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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