A Fibonacci calculator is said to be a forex widget or tool that is used to generate openings for profit maximization by means of setting profit targets in charts. A Fibonacci calculator has both the retracement and extension tools. The calculator generates a level of retracement and extension for its user. The use of both the retracement and extension tools depends on a trader’s ability to trace the tools on the chart which can be done by identifying the high and low swings of prices.
DEFINITION OF TERMS
This is said to be a very important tool used by technical forex traders. Technically, Fibonacci retracement is formed by taking a major peak on a currency chart and then dividing the vertical distance of the currency chart by the most important Fibonacci ratios which are 23.6%, 38.2%, 50%, 61.8% and 100%. Once these values of retracement are identified, possible support and resistance level are also identified by horizontal lines. Unlike other moving averages, the Fibonacci retracement levels have static prices in that they do not change. This point allows traders to react when stock and currency price levels are tested by a quick and simple identification of the chart pattern. The forex trader will now expect a break or a rejection in the price action since the levels are inflated points.
The extension tool is mainly for tracking currency moments in the forex market and this is illustrated using a Fibonacci chart. Fibonacci extension identifies the extent to which the currency pair will make the renewed move after a retracement.
A Fibonacci sequence is said to be a series of organized numeric where a number is derived by the addition of two numbers before it. It is a sequence of integers in which the first and second number are both equal to one and each preceding number is the sum of the two before it. The Fibonacci sequence starts with a 0 and 1 which goes like this; 0, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89 etc.
IMPORTANCE OF FIBONACCI CALCULATOR AND RETRACEMENT TO FOREX TRADERS
Fibonacci retracement is a forex technical analysis used by forex traders for the purpose of resistant and support level determination. This is majorly because a specific forex market can undergo a retrace in a predictable pattern of movement after which they will be seen to experience an ordinary directional movement. This type of Fibonacci retracement is however known to be an usual volatility in a security’s price which is formed by taking two extreme point in the Fibonacci profit target chart and dividing the vertical distance by the strategic Fibonacci ratio where 0.0 percent is stated as the commencement of the retracement and 100 percent is the ample reversal to the original part of the movement. Horizontal lines are used to identify various levels of support and resistance.
Forex traders make use of the Fibonacci calculator as a retracement tool which aids in the determination of small price corrections and in the identification of support areas and resistance. Fibonacci retracements are ratios centered on the sequence of Fibonacci which is used to estimate the extent of modifications in a normal forex market wave. It is also used in the determination of forex market pullbacks or continuation patterns.
A Fibonacci calculator can also be used by forex traders in breakout scenarios to detect exit and entry trade positions if a retracement is confirmed to be an effective support or resistance level within a currency’s historical price pattern.
Fibonacci retracement is an excellence tool in Fibonacci calculator used by technical forex traders in the location of strategic points and places for forex transactions, aimed price and stops losses which helps them to meet face to face with good price positions in the foreign exchange market. After well-expressed price which are either rising movements or descending movements, a new support and resistant level is revealed.
On like other Fibonacci calculator parameters, all the price levels of Fibonacci retracement are stationary in nature and do not alternate. This fact helps in a modest location of price levels by forex traders and investors when tested. Since the Fibonacci retracement levels are points of inflection, some level of price actions such as a break or a rejection is also expected by the traders. In stock analysis, Fibonacci retracement level of 0.618 is the most used and it is approximated to the golden ratio.
In conclusion, they also help in simple identification of price levels by forex traders and investors when tested. Since the Fibonacci retracement levels are inflection points, some level of price actions such as a break or a rejection is also expected by the traders. The Fibonacci retracement level of 0.618 is the most used by stock analysis which is approximated to the golden ratio.