Fibonacci Retracement

Introduction: Fibonacci Retracement is a tool that assists traders with distinguishing likely support and resistance levels by utilising even lines at key Fibonacci proportions (23.6%, 38.2%, half, 61.8%, and 100 percent).

Terminologies:

• Support: A price level where a stock will in general quit falling and could return up.
• Resistance: A price level where a stock will in general quit rising and could switch descending.
• Fibonacci Sequence: A progression of numbers where each number is the amount of the two going before ones (e.g., 0, 1, 1, 2, 3, 5, 8… ), prompting significant proportions like 61.8%.

Explanation: Fibonacci Retracement levels depend on the conviction that markets will remember an anticipated piece of a move prior to going on in the first heading.

Example: Stock XYZ ascends from ₹100 to ₹150. Utilizing Fibonacci Retracement, key levels may be drawn at ₹118 (23.6%), ₹126 (38.2%), ₹135 (half), and ₹141 (61.8%) as expected help or resistance focuses.

How to Use:

• Buy when the price hits a key Fibonacci Retracement level during an uptrend.
• Sell when the price hits a Fibonacci level during a downtrend.

Scenario: Stock ABC ascends from ₹50 to ₹100, then remembers to the 61.8% level at ₹81 prior to returning quickly. This could flag a purchasing opportunity.

Formula: No specific formula; Fibonacci levels are drawn on a chart between a high and a low price point.