How do we use Fibonacci retracement to identify support and resistance zone?

[Naveen]

fibonacci is originally created by a mathematician leonardo fibonacci and there are support zones which is 23.6%,38.2%,50%,61.8% and 100%

when the stock goes beyond 23.6% and touch to 38.2% and comes to 23.6% then it is a support zone and now once goes beyond 38.2% it is a resistance zone.

[KRISHNA KUMAR MS]

While answering the 1st question, I had put a note that how to use Fibonacci series for our trading and technical analysis is clear to me. I went to the recall lessons and learnt the answer.

FIBONACCI RETRACEMENT is based on Fibonacci ratios namely 61.8%, 38.2%, 23.6% (which are arrived by his series 0 1 1 2 3 5 8 13 21 34 55 89 144..up to infinity in which the (from the third) number in the series is the sum of two numbers in the left and 61.8% is the % arrived by any number in the series divided by its next right side number in the series EX 13/21 or 55/89etc and 38.2% is the % arrived by any number in the series divided by its second number at the right side in the series EX 21/55 or 55/144 etc and 23.6% is the % arrived by any number in the series divided by the third number at the right side in the series EX 21/89 or 34/144 etc)
FIRST OF ALL draw the horizontal lines regarding the SUPPORT level and RESISTANCE level of the stock by noting SUPPORT as 0% and RESISTANCE as 100%
NOW draw horizontal lines with respect to FIBONACCI RATIO s 23.6% ,38.2%, 61.8%
IN THE BULL TREND
IF THE PRICE MOVES UPWARD AND CROSSES ABOVE 23.6% then it is the SUPPORT and the next RESISTANCE is at 38.2% LEVEL
if the price still moves UP and crosses ABOVE 38.2% level then it is the SUPPORT and the next RESISTANCE IS at 61.8%
IN THE BEAR TREND
IF the price goes down the 61.8% then this is the RESISTANCE and the SUPPORT is at 38.2% level
IF the price goes down the 38.2% then this is the RESISTANCE and the SUPPORT is at 23.6% level
THESE ratios should be used in conjunction with technical analysis.

[sreevalli]

<span style=”font-family: Arial, sans-serif; font-size: 14px; line-height: 19.6px;”>Fibonacci Retracements are ratios used to identify potential reversal levels. These ratios are found in the Fibonacci sequence. The most popular Fibonacci Retracements are 61.8% and 38.2%. Note that 38.2% is often rounded to 38% and 61.8 is rounded to 62%.</span>
<div class=”level2″ style=”margin: 0px; padding: 0px; font-family: Arial, sans-serif; font-size: 14px; line-height: 19.6px;”>
<p style=”margin: 0px 0px 1.4em; padding: 0px;”>These retracements can be combined with other indicators and price patterns to create an overall strategy.</p>
<p style=”margin: 0px 0px 1.4em; padding: 0px;”></p>

</div>
<h2 id=”the_sequence_and_ratios” class=”sectionedit3″ style=”margin: 0px 0px 0.666em; padding: 0px; color: #000000; line-height: 1.2; clear: left; font-family: Arial, sans-serif;”><span style=”color: #777777; font-family: ‘Open Sans’; font-size: 13px; font-weight: normal; line-height: 20px;”>IF the price goes down the 61.8% then this is the RESISTANCE and the SUPPORT is at 38.2% level</span><br style=”box-sizing: border-box; color: #777777; font-family: ‘Open Sans’; font-size: 13px; font-weight: normal; line-height: 20px;” /><span style=”color: #777777; font-family: ‘Open Sans’; font-size: 13px; font-weight: normal; line-height: 20px;”>IF the price goes down the 38.2% then this is the RESISTANCE and the SUPPORT is at 23.6% level</span></h2>

[davidrajan]

<span style=”font-family: Arial, sans-serif; font-size: 14px; line-height: 19.6px;”>Fibonacci Retracements are ratios used to identify potential reversal levels. These ratios are found in the Fibonacci sequence. The most popular Fibonacci Retracements are 61.8% and 38.2%. Note that 38.2% is often rounded to 38% and 61.8 is rounded to 62%. </span>

<span style=”font-family: Arial, sans-serif; font-size: 14px; line-height: 19.6px;”>These retracements can be combined with other indicators and </span>price patterns<span style=”font-family: Arial, sans-serif; font-size: 14px; line-height: 19.6px;”> to create an overall strategy.</span>

[goodwinbritto]

Fibonacci analysis can be applied when there is a noticeable up-move or down-move in prices. Whenever the stock moves either upwards or downwards sharply, it usually tends to retrace back before its next move.
‘The retracement level forecast’ is a technique using which one can identify upto which level retracement can happen. These retracement levels provide a good opportunity for the traders to enter new positions in the direction of the trend.
The Fibonacci ratios i.e 61.8%, 38.2%, and 23.6% helps the trader to identify the possible extent of the retracement. The trader can use these levels to position himself for trade.

Fibonacci retracements use horizontal lines to indicate areas of support or resistance. They are calculated by first locating the high and low of the chart. Then five lines are drawn: the first at 100% (the high on the chart), the second at 61.8%, the third at 50%, the fourth at 38.2% and the last one at 0% (the low on the chart).

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