Fibonacci: The Tool Every Trader Must Master

Fibonacci levels are not magic, but they are not garbage either. It's pure mathematics that the market respects (sometimes too well).

The basics you need to know

Fibonacci retracements (23.6%, 38.2%, 50%, 61.8%) are areas where the price often bounces before continuing the trend. How to use them?

1. Identify the swing: Find the lowest and highest point of the trend
2. Draw the tool: In MetaTrader or TradingView, drag from the minimum to the maximum (bullish trend) or from the maximum to the minimum (bearish trend)
3. Observe the bounces: The price tends to “respect” these levels - especially 61.8% and 50%

Real example

A stock rises from $100 to $200. Fibonacci shows you that if it falls, it will find support at:

• $161.80 (61.8%)
• $150 (50%)
• $138.20 (38.2%)
• $123.60 (23.6%)

Extensions: The whites after the rebound

Once the price rebounds from the retracement, use extensions (127.2%, 161.8%, 200%) to project where the next impulse will reach.

Tips that work

• Never use Fibonacci alone - combine it with MACD, RSI, volume levels.
• In larger timeframes (H4, D1) works better than in M5
• Manually adjust the points according to the actual closing candles
• Practice first with backtesting - not with your money

Fibonacci is a tool, not a crystal. It works better when you use it with other indicators. Master it.