just to share some info with you..
price retracement levels: 0.236 , 0.382 , 0.500 , 0.618 , 0.764
price extension levels: 0 , 0.382 , 0.618 , 1.000 , 1.382 , 1.618
blue set = use in trading as possible support and resistance level. the reason we have this expectation is that traders all over the world are watching these levels and placing buy and sell orders at these levels which becomes a self fulfilling expectation.
red set = use in trading as possible profit taking levels. again, traders all over the world are watching these levels and placing buy and sell orders to take profits at these levels which becomes a self fulfilling expectation
most good trading software packages include both fibonacci retracement levels and price extension levels. in order to apply fibonacci levels to price charts, it is necessary to identify swing highs and swing lows.
a swing high is a short term high bar with at least two lower highs on both the left and right of the high bar. a swing low is a short term low bar with at least two higher lows on both the left and right of the low bar.
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