Fibonacci curve explanation

The Fibonacci method: How it reveals the intricacies of the forex trade market

The Fibonacci Method is one of the most essential aspects of forex trading. It basically includes indicators, charting and instrumental spotting patterns. The main strategies which are employed under the utility for the funds traded through exchanges, stock indices and different stocks indicated in the returns.

Furthermore, the Elliot wave concept is used, which includes the classic applications and principles. The main idea behind using the Fibonacci numbers is to predict as a potential tool in the trading system is to predict and calculate the important and pivotal points in the forex markets which might be indispensable in causing sudden twists and turns, analyze the business growths and other economical recycles which might occur. At the same time, these Fibonacci methods are also pivotal in predicting the profitable and benefiting aspects of the interest rate and their movements.

Thus, the Fibonacci numbers and shapes are very important for the forex traders to scrutinize the ups and downs of the market and make more potential profits.

All about the curve, rectangle and the triangle

The Fibonacci curve, rectangle and the triangle are used for important ways for analyzing the forex market. So let's have a look at the significance of Fibonacci rectangles, curves and triangles.

The numbers in the Fibonacci series are 0, 1, 2, 3, 5… and so on. In this sequence the first and the second consecutive number are added to give the third number, which once again added with the other consecutive number gives the fourth digit and so on. So, after following the Fibonacci numbers, squares can be drawn by calculating the small squares next to each other. Now, after making two squares, each of one-one unit, the third square is drawn on the top of the last two drawn squares. The third square which is consecutively drawn is three units in length. In the same manner, the squares are added one by one. This set of added rectangles, which are produced by consecutively adding the length of the successive last two squares, are termed as Fibonacci rectangles.

In the same manner, by joining the quarter of the circles, the curves are drawn, which are present one-one in both the respective squares. This is termed as a Fibonacci shell. In the same manner, if the shape is that of the nautilus shell or a snail shell, it is termed as the Fibonacci curve. In the same manner, the triangle is constructed.

How these work?

These extensions and tools in the Fibonacci trading system are used to measure the growth of the market by comparatively analyzing the overall movement. With these shapes, the forex traders get the ideas regarding the colloquial price areas.

With the application of Fibonacci on the charts, the ratio levels are plotted and the respective direction in which the market is currently moving is penned down. Through this incorporation, the respective levels of the potential resistance and support of the market are also calculated.

Fibonacci retracement

Zero percent is the considered as the peak of the crest of the move while hundred percent is considered as the bottom most point of the trough of the move. The trading signals are revealed by the Fibonacci retracement zones or levels which are calculated at 23.6%, 38.2% and 50%.

Since it's mostly seen that history is continuously repeated when it comes to the forex market, the Fibonacci methods prove be to be very applicable over here. Thus, with these shapes, the forex traders are not only able to predict the entire course of the market, they also end up preventing worthless investments.