Pros and cons of Fibonacci Retracements trading strategy.

[Nancy parez]

Fibonacci support and resistance

Fibonacci levels are mainly used to identify support and resistance levels. When a security is trending up or down, it usually pulls back slightly before continuing the trend. Often, it will retrace to a key Fibonacci retracement level such as 38.2% or 61.8%. These levels provide signals for traders to enter new positions in the direction of the original trend. In an uptrend, you might go long (buy) on a retracement down to a key support level. In a downtrend, you could look to go short (sell) when a security retraces up to its key resistance level. The tool works best when a security is trending up or down.

Pros and cons of Fibonacci Retracements

Pros of Fibonacci Retracements
As a means of identifying levels of support and resistance, Fibonacci retracements can be used to confirm suspicions of a market movement.

Cons of Fibonacci Retracements
However, Fibonacci retracements require a high level of understanding to be used effectively. Simply drawing lines on a price chart at the Fibonacci percentages will likely not yield positive results unless traders know what they are looking for. As such, beginner traders should take care when using Fibonacci retracements to be sure that a dip in an asset's price is a temporary pullback, rather than a more permanent reversal.

Why do traders use Fibonacci Retracements?

Markets rarely move in a straight line, and often experience temporary dips – known as pullbacks or retracements. Fibonacci retracements are used by traders to identify the degree to which a market will move against its current trend.

The retracements are based on the mathematical principle of the golden ratio. The sequence for the golden ratio is 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, and so on, where each number is roughly 1.618 times greater than the preceding number.

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Thank You

[Resolve]

If we are able to identify the Fibo levels correctly then the income we are going to get will also get increased.

[uncle gober]

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