Recently I had given a brief background
about the history of the golden mean. Its application is so vast that
even the financial market has not been exempted. At present, the
Fibonacci retracement is widely known for its ability to determine
the support and resistance level of the current market price.
According to what I've read, it is
based on the idea that the market will retrace a predictable portion
of a move, after which it will then proceed with the original trend.
It may be drawn by first selecting it
on the insert section of the tool bar of the trading platform. A
separate section for the Fibonacci may be found there in which the
retracement is located. After clicking the retracement, you must
first identify two extreme point which will be used to draw the line.
Draw the retracement from the high and
low point of the trend and after drawing the retracement
successfully, six lines will appear each with its corresponding
percentage. The new support and resistance level are usually found
near the 61.8, 50.0, and 38.2 levels.
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