# Fibonacci Retracement (Golden Ratio) In Trading Strategy

The origin of Fibonacci Confluence Zones numbers and the golden ratio can be traced back to the ancient mathematician Leonardo of Pisa, also known as Fibonacci.

If a price retraces to one of these levels following a significant move upward or downward, it may suggest a potential change in trend, prompting traders to make buying or selling decisions.

## What is the golden ratio of Fibonacci?

In his book “Liber Abaci,” published in 1202, he introduced the sequence of numbers now known as the Fibonacci sequence.

These levels are determined by computing the vertical distances between an asset’s high and low points and then dividing these distances by key Fibonacci ratios (23.6%, 38.2%, 50%, 61.8%, and 100%).

Traders in finance utilize Fibonacci retracements to identify likely levels of support and resistance in an asset’s price movement.

The Fibonacci trading strategy involves Patterns Cheat Sheet analyzing and executing trades based on the Fibonacci sequence, a series of numbers where each number is the sum of the two preceding ones (0, 1, 1, 2, 3, 5, 8, 13, 21, 34, etc.).

## How to use Fibonacci retracements in trading

As prices retrace, they may encounter support or resistance at one of these levels, prompting traders to make trading decisions accordingly.

To use Fibonacci retracements in trading, traders first identify the high and low points of the asset’s price movement.

For instance, if the price of gold experienced Automatic Trendline a significant move from \$1,500 to \$1,800, a trader might observe support at the 50% retracement level near \$1,650, potentially prompting them to enter a long position with a stop-loss order below the 50% Fibonacci level.

They then plot Fibonacci retracement levels between these points using charting tools, including levels such as 23.6%, 38.2%, 50%, 61.8%, and 100%.

## Fibonacci Retracement Levels Projections

Fibonacci projection, a technical analysis tool, predicts potential levels of support and resistance in an asset’s future price movement using the Fibonacci sequence.

By plotting these numbers on a chart, traders can identify key levels where the asset price may experience resistance or support. While not a guarantee 5 Minute Gold of future market performance, Fibonacci projections provide valuable insights into potential market movements.

Investors utilize Fibonacci projections alongside other technical analysis indicators and fundamental analysis to make informed investment decisions.

## Best time frame for Fibonacci Retracement

A Fibonacci fan is a technical analysis tool that employs Fibonacci retracement lines to identify potential levels of support and resistance in an asset’s price action.

This tool is particularly useful for momentum Vortex Sniper or trend-following trading strategies, aiding in identifying key levels where the trend may reverse or continue.

## fibonacci retracement calculator excel

Created by drawing a trendline between two extreme points and dividing the vertical distance by key Fibonacci ratios, such as 23.6%, 38.2%, 50%, 61.8%, and 100%, Fibonacci fans assist traders in check areas where the price may potentially experience support or resistance.