What is the Fibonacci sequence?

First, let's define what this so-called "Fibonacci" is so you have a better idea as to why it is a concept relevant to trading cryptocurrencies. Leonardo of Pisa (A.K.A. Fibonacci) was an 11th-century mathematician responsible for introducing a unique sequence of numbers to the West, now known as the "Fibonacci Sequence."

What are Fibonacci levels used for?

As mentioned, the Fibonacci levels can be used for evaluating retracement or bounce areas (number 1 in the animation below). But in addition to that, the Fibonacci sequence can also be used as a way to gauge potentially important levels outside of the current range. These are called extension levels (see number 2).

What are the best Fibonacci numbers for trading?

Especially in trending environments, the Fibonacci sequence is a great tool to identify price targets and support levels for pullbacks. My favourite Fibonacci numbers in trading are 0.382 (Because 1 minus 0.618 = 0.382) and 0.618. These numbers can be used directly as price targets, but the real power of Fibonacci lies in relative movements.

Why is the Fibonacci pattern interested?

The pattern interested Fibonacci because however far you take the number sequence, any number in the sequence is 1.618 times larger than the preceding one.