Fibonacci levels in trading: how to use them?
Technical analysis consists in determining the future value of a financial asset on the basis of mathematical models, as well as market regularities. Speaking about the patterns, most market participants use such tools as Fibonacci levels.
Fibonacci figures indicate possible corrective zones to the traders and also demonstrate market phases. These values work with accuracy as support and resistance levels. All levels that from a certain Fibo grid indicate in themselves the levels of support and resistance calculated on the basis of mathematical models.
To use this tool in your fix api trading, you need to set the Fibonacci for the entire trend movement. Personally, I use these levels together with the Elliott wave theory. This allows me to set goals for future waves and deals on them.
How to do it: we set a zero value at the beginning of the generated movement and the ending on the wave or trend. This helps us understand at what corrective level of the current wave the quotes of the currency pair on the fix apiforex market rolled. Thus, we can place pending orders for the sale after reaching these zones. This will depend on your trading strategy.
Thus, Fibonacci levels have a number of auxiliary functions:
- Ability to determine the market phase;
- They are a guide for setting up Stop loss and Take profit;
- They are combined with other elements of technical analysis;
- They allow you to work in correctors between levels;
- Suitable for grid algorithms.