How do crypto traders use Fibonacci retracement?

Crypto traders use the Fibonacci retracement tool to identify support and resistance points while trading. The tool is made up of numbers derived from the differences between the numbers in the sequence. The numbers include 0.236, 0.382, 0.618, and 0.786.

Why do traders use Fibonacci levels?

Traders may use Fibonacci levels to determine potential entry areas, price targets, or stop-loss points. This can vary significantly on the individual setup, strategy, and trading style. Some strategies involve profiting on the range between two specific Fibonacci levels. For example, consider an uptrend followed by a retracement.

What is a Fibonacci sequence?

The sequence has numerous applications in many fields of science. In technical analysis, however, it is most commonly encountered in the Fibonacci retracement and Fibonacci extension tools. Fibonacci levels are based on the so-called Fibonacci sequence. Fibonacci levels can be utilized to identify support and resistance zones on a trading chart.

What is the golden ratio of Fibonacci trading tools?

The fact that, according to the Fibonacci calculation, every number is 1.618 greater than the number before it, gives us the so-called golden ratio. The inverse of the golden ratio is 0.618, and that brings us to the basic percentage of Fibonacci trading tools, which is 61.8%.