Read the story here. Advertise at Before It's News here.
Profile image
By BusinessImpacts
Contributor profile | More stories
Story Views
Last hour:
Last 24 hours:

Guide to Using Fibonacci Levels for Forex Trading

% of readers think this story is Fact. Add your two cents.

There has been a greater interest in forex trading during the past year, when compared to previous years, significantly driven by a large influx of new retail traders. On top of that, the market volatility has increased and for the first time in a few years, the currency market is more active.

As always, the emphasis is on the US Dollar which has been gaining, tracking the rise in Treasury yields. However, the trend has been uneven, leading to trading opportunities for both buyers and sellers. What’s even more important is that Dollar-denominated pairs are very liquid and create a proper environment for using technical analysis methods such as Fibonacci levels.

In this material, retail traders can find out two effective ways to use Fib retracement as well as multiple hints on how to increase their accuracy.

What Are Fibonacci Retracement Levels?

For those who don’t already know, Fibonacci retracement levels are horizontal lines that can indicate where support/resistance could likely occur. These levels stem from the Fibonacci sequence, a mathematical formula that originated in the 13th century.

The main Fibonacci retracement levels are 23.6%, 38.2%, and 61.8%, even though some traders sometimes even use the 78.6% or 50% levels, which is not a Fibonacci ratio. Markets don’t move up or down in a straight line, which makes the case for developing methods and techniques to get involved in the dominant trend, while also taking advantage of more attractive valuations generated by corrective moves.

Fib Levels for With-Trend Trading

In forex, Fib retracement levels are very often used for with-trend trading and to illustrate that, the next example on EURUSD would be conclusive. The Euro dropped until October 12th, breaking below multiple support levels, but as the risk sentiment improved, the Euro was among the gainers.

Chart, histogramDescription automatically generated

Based on the chart above, we can see the price rising, only to encounter resistance around 1.1620. Following that, sellers regained short-term control, which led the price lower towards 1.1575, where the 50% Fib retracement level was located. After that, buyers resumed impulsively and managed to break above 1.1620.

Fib Levels for Range Trading

The above example shows how to use Fib levels when there is clear directional bias. However, markets can be undecided sometimes, which makes the case for range trading. A second chart is related to GBPUSD, a pair that has been rising as the BOE is hinting at higher rates.

ChartDescription automatically generated

From a technical analysis point of view, if we plot the Fib levels for the bullish move between September 25th, 2020 and February 23rd, 2021, we can easily notice a highlighted area during which the price was range-bound between the 23.6% and 38.2% Fib levels. Given it is a daily chart, FX traders could find intra-day opportunities by also using smaller time frames.


Both examples show that Fib retracement levels can be used in different market conditions when there is a clear trend in play and also if the order flow is balanced and neither buyers nor sellers are in control. The efficiency of these techniques can be improved if traders add up oscillators and other support/resistance levels.

Before It’s News® is a community of individuals who report on what’s going on around them, from all around the world.

Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.

"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.

Please Help Support BeforeitsNews by trying our Natural Health Products below!

Order by Phone at 888-809-8385 or online at M - F 9am to 5pm EST

Order by Phone at 866-388-7003 or online at M - F 9am to 5pm EST

Order by Phone at 866-388-7003 or online at M - F 9am to 5pm EST

Humic & Fulvic Trace Minerals Complex - Nature's most important supplement! Vivid Dreams again!

HNEX HydroNano EXtracellular Water - Improve immune system health and reduce inflammation

Ultimate Clinical Potency Curcumin - Natural pain relief, reduce inflammation and so much more.

MitoCopper - Bioavailable Copper destroys pathogens and gives you more energy. (See Blood Video)
Oxy Powder - Natural Colon Cleanser!  Cleans out toxic buildup with oxygen! 
Nascent Iodine - Promotes detoxification, mental focus and thyroid health.
Smart Meter Cover -  Reduces Smart Meter radiation by 96%!  (See Video)

Report abuse


    Your Comments
    Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

    Load more ...




    Email this story
    Email this story

    If you really want to ban this commenter, please write down the reason:

    If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.