The Fibonacci sequence is a mathematical ratio in which a number is simply the sum of the two preceding numbers. Here, we will focus on its application as a indicator in technical analysis. If you are interested in the background of the Fibonacci numbers, read the Wikipedia article.

In trading, the term Fibonacci refers to a tool that measures the size of a price move and subsequently plots support and resistance levels based on calculations using the Fibonacci sequence.

They are generally strong levels of support and resistance, also because they are a self-fulfilling prophecy. Banks, financial institutions and other traders observe these support and resistance levels and make their buying and selling decisions based on them.

Read more about employing the Fibonacci tool:

Use support and resistance, trend lines, multiple time frame analysis and other elements of technical chart analysis to determine future price action.

The Fibonacci tool is popular in technical analysis. Discuss it with other traders:

From Japanese candlesticks to the Fibonacci indicator, technical analysis is the mathematical approach to trading.

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