After discussing how Fibonacci
retracements helps in determining the support and resistance level,
we will now tackle our ideal level wherein we could at last hoard our
much awaited profit.
Fibonacci expansion's main job is to
specify up to what value would the movement would last. How do we do
it? It's actually simple but you must first know the concept of
Fibonacci retracement. If you could remember, the main concept of
fibonacci retracement is that before a trend move in its main
direction, retracements could be formed in between. In simpler terms,
support and resistance are always present in trends.
Fibonacci expansion may also be used to
predict areas of support and resistance. But it goes beyond the 100%
that Fibonacci retracement offers. It is an extension of the
retracement which may give the trader an idea on where would it be
best to take your profit.
How to apply it?
First and foremost, analyze the latest
movement of the market and seek for signs of retracements. If in case
the current movement doesn't display a retracement or it is still not
yet complete, wait first for a complete retracement to materialize.
After that, you can now apply the expansion by mimicking the recently
completed retracement.
The FE levels 61.8, 100.00 , and 161.8
will then appear and will serves as your guide for your TPs.
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