Fibonacci Trading - Financial Market Signals and Analysis

What is Fibonacci Pattern?

One of the most common and powerful trading pattern, with diverse type and specifications, which is based on theory of sequential numbers and levels proposed by Leonardo Pisano Bigollo (known as Leonardo Fibonacci).

Each number is calculated from adding latest two numbers;

1, 1, 2, 3, 5, 8, 13, 21, 34, 55 …. Fibonacci Trading

In this pattern, each level acts as a powerful support/resistance on market price:

0 - 23.6% - 38.2% - 50% - 61.8% - 76.4% - 88.6% - 1 – 1.27 - …

Fibonacci pattern has a starting and ending point that can be placed on the last peak and valley of a market price swing. The most widespread Fibonacci patterns are Retracement and Expansion with various applications and specifications.

Fibonacci Retracement is mostly used to detect the Support levels while Fibonacci Expansion can be utilized to determine probable Resistance levels against market trend.

Diverse Fibonacci Trading Signals

Through different types and combinations of this trading pattern, we represent the following Trading Signals;

Type I

Overlapped Fibonacci Retracements: On a long trend with 2 agreeing waves, 1st Fibonacci pattern can be placed considering the long trend. The short wave is used to draw the 2nd Fibonacci pattern.

Considering that both two patterns are placed on agreeing waves and the end points of these patterns are on the same price then any overlapped levels have great deal of effect on market price trend.

If price proceeds toward any of those overlapped levels and a powerful reversal candlestick pattern appears then a credible trading signal is generated.

Type II

Fibonacci Retracement with Trend Lines: On a market price trend that has 2 waves on a long swing, a trend line can be drawn. The levels of Fibonacci on the swing are crossed by that trend line.

If the price goes toward those spots and forms powerful reversal candlestick patterns then a suitable price to place an order is detected.

Fibonacci Trading

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