This week we will be discussing how to use Fibonacci for your swing trade analysis.
Did you know you can use Fibonacci for your swing analysis? Do you even know what Fibonacci is? Right now, some of you may be telling yourselves that just the name “Fibonacci” sounds too complicated for you. But it’s really not!
Fibonacci is a series of numbers where you can find the next number in the sequence by adding the two previous numbers together.
For example: 0+1=1, 1+1=2, 1+2=3. If you guessed the next number in the sequence is 5 (2+3=5), you now understand Fibonacci. If you would like more information on how to calculate Fibonacci, you can click here.
So why is Fibonacci essential to us as traders? Well, just as a carpenter uses a tape measure to take his/her measurements, traders use Fibonacci as a tool to measure the market.
You can use the Fibonacci number sequence as percentages to measure pullbacks in the market.
Traders typically use the 38.2%, 50%, 61.8% and 78.6% Fibonacci numbers to measure retracements in the stock market, futures market, and the forex market. These levels tend to act as support and resistance in the market.
In the video below, I demonstrate how, when used correctly, Fibonacci retracements can be a powerful tool for traders. However, you want to avoid just placing a random order at a Fibonacci level. I know it can be very tempting, at times, to place an entry order at the retracement level. Especially when you just looked over several charts and each time price touched the level and then traded back in the direction of the trend. But, please trust me when I tell you this can be reckless.
As you will see, I prefer to use the Fibonacci when swing trading or day trading, by waiting for the price confirmation before I enter a trade.
In closing, I would like to once again remind everyone about the FREE live streams, hosted by myself, each week. These live streams are an excellent opportunity for traders of all skill levels to ask questions and interact with me live. Again, this experience is entirely FREE to you. So if you haven’t already signed up, why are you waiting? Fill out the form above to be notified before any of my future live streams.