cashbackforexbroker retracement cashbackforexexness 23.6%, 38.2%, 50% forex rebate club 61.8% plays an important role forexrebateclub financial markets and is used to define key positions for price reversals Fibonacci retracement helps to determine where to enter the market strategically, prevent losses and identify areas of support or resistance This article will introduce Fibonacci retracement in forex market trading The most po cashback forexrful and easy to understand application of the Fibonacci retracement trend following strategy Before we start lets take a look at the Bitcoin 4 hour chart: here we can see that the price was in a downtrend before the rally and bounced at exactly at the 38.2% retracement line After reaching the 38.2% Fibonacci water retracement level, the price reversed and fell, which is the direction of the overwhelming trend as you can see from the chart There are several different retracement levels: 23.6%, 38.2%, 50% and 61.8% they all represent potential resistance levels to the downside so these levels all represent potential entry points to re-enter the downtrend which means we have four potential reversal points into the market but which one should you choose? Looking at the chart above, we can see that the Stochastic Oscillator gives us a clue that the market is going to reverse with the Stochastic Oscillator level above the 80 line and bending downwards, which is a bearish indicator. A good trader is like Sherlock Holmes and builds a case based on multiple clues we found two good clues to short positions, but thats not all. Zooming in on the image and looking at the daily chart above, we can see that the trend is also broadly downward in this time frame which further supports selling at the 38.2% Fibonacci retracement level. For short positions (sell trades), we would expect to see the market trending down over multiple time frames For long positions (buy trades), we would expect to see the market trending up over multiple time frames The Fibonacci bounce on the four-hour chart is relatively large at the 38.2% line at 9119, with the price sliding all the way down to $8190, a drop of over $900 This is A forex strategy that can be applied in different time frames For example, you can look for similar setups on a 30-minute chart instead of the four-hour chart we used as an example Remember, in shorter time frames you will get more signals, but they will be less reliable Conversely, in longer time frames you will get fewer signals, but they will be more reliable How to use Fibonacci retracements in forex trading To enter the forex market at the Fibonacci retracement line position, you can either set a sell stop order (in the case of a downward rally) or a buy stop order (in the case of an upward retracement) or, when the price reaches the Fibonacci level, you can choose to place a manual take profit and stop loss level using a market order A good rule of thumb is to set a profit target that is more than 3 times the loss target So, in the forex trading above, we could set the risk at $200 and the profit target at $600 Fibonacci retracements will help determine support and resistance areas, but the tool can be used to maximum effect by combining it with other indicators and forex strategies For example, you can use the Stochastic Oscillator to define trends and price reversals Fibonacci retracements are trend-following tools that work over multiple Fibonacci retracements are a good confirmation tool to ensure high probability trades in combination with the strategies presented in this article We hope you will find the best way to trade with Fibonacci retracements
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