The first thing you should know about the Fibonacci tool is that it works best when the forex market is trending. The idea is to go long or buy on a retracement at a Fibonacci support level when the market is trending up, and to go short or sell on a retracement at a Fibonacci resistance level when the market is trending down.

In order to find these Fibonacci retracement levels, you have to find the recent significant Swing Highs and Swings Lows.

Fibonacci Ratios Explained – What are the "Fibs"?

Then, for downtrends, click on the Swing High and drag the cursor to the most recent Swing Low. For uptrends, do the opposite. Click on the Swing Low and drag the cursor to the most recent Swing High.

Here we plotted the Fibonacci retracement levels by clicking on the Swing Low at. The software magically shows you the retracement levels. As you can see from the chart, the Fibonacci retracement levels were.

Price pulled back right through the It even tested the Later on, around July 14, the market resumed its upward move and eventually broke through the swing high. Clearly, buying at the As you can see, we found our Swing High at 1.

The retracement levels are 1. The market did try to rally, stalled below the If you had some orders either at the In these two examples, we see that price found some temporary forex support or resistance at Fibonacci retracement levels. Because of all the people who use the Fibonacci tool, those levels become self-fulfilling support and resistance levels.

How to set up Fibonacci retracement levels in MetaTrader 4

If they were that simple, traders would always place their orders at Fibonacci retracement levels and the markets would trend forever. We introduce people to the world of currency trading, and provide educational content to help them learn how to become profitable traders. We're also a community of traders that support each other on our daily trading journey. BabyPips The beginner's guide to FX trading News Trading.

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