How to use Fibonacci

Using Fibonacci retracement in trading involves identifying potential support and resistance levels based on key it ratios. Traders begin by selecting a significant price high and low on a chart. They then apply the Fibonacci retracement tool, which automatically generates horizontal lines at the key Fibonacci levels: 23.6%, 38.2%, 50%, 61.8%, and 100%. These levels indicate potential areas where the price may reverse or consolidate. Traders use these retracement levels to identify entry and exit points, set stop-loss orders, and determine profit targets. By incorporating retracement into their analysis, traders can enhance their ability to predict price movements and manage risk more effectively. Understanding how to useit retracement can improve trading strategies and increase profitability in various financial markets.