Page 7 - Module 11 The Fibonacci science

Module 11 – The Fibonacci Science

the 62% or 79% levels as it continues. The markets generally do not have nonstop, 24 hour,
aggressive volatile price movement.
2. how fibonacci numbers can be used in forex trading?

Fibonacci trading is not complicated. By using the Fibonacci numbers on the charts, you can find
more supports and resistances. It will be a big help to choose the right direction and avoid
taking wrong positions.

To use the Fibonacci numbers on the charts, you must find the top and the bottom of the
previous trend. When the previous trend is a downtrend, you draw the Fibonacci levels from top to
the bottom and extend the lines in the way that they cover the next completing and ongoing trend.
When the previous trend is an uptrend, you draw the Fibonacci levels from bottom to top and extend
the lines in the way that they cover the next completing trend.

You must wait for the trend to become matured:
You cannot draw the Fibonacci levels while the trend is not matured. When you cannot find a
completed trend in a time frame, you must look for one in a smaller or bigger time frame in the same
currency pair or stock.

3. fibonacci levels acting as support and resistance

Fibonacci levels act as support and resistance. When the price is going up and you have already taken
a long position (you have bought), you should be careful when the price becomes close to one of the
Fibonacci levels. It is possible that it goes down and you lose the profit you have already made. So
you have to move your stop loss to the open price of the first candlestick that is touching the
Fibonacci level or a little higher. It depends on the length of the candlestick.

Or simply if you have made enough profit, you can close your trade and wait for the price to break
the Fibonacci levels or fail and go down. You can take a new position then.

It is the same as when the price is going down, but in this case Fibonacci levels act as resistance.
Keep in mind that when one of the Fibonacci levels is broken, the price usually pullback to retest. If
you get ready for all these possibilities, you will not be trapped.

You treat Fibonacci levels like real supports and resistances. They really have no difference and
sometimes they act even stronger.

4. the working of fibonacci levels in a trend.

Follow the red numbers on the below chart:
1. The price that started to go down on 23 Nov 2007, touched the 23.60% level on 5 Dec 2007.
These levels worked as a support and so the price went up as soon as it touched the level but
then went down to retest the 23.60% level. As you know, usually when the price cannot break
a support or resistance, it tries to retest later and sometimes it can break them after retesting.

2. So, the price went up, but tried to retest the 23.60% level eight days later on 14 Dec 2007 and
succeeded to break the 23.60% level this time and so went down.

3. The price touched the 38.20% level on 17 Dec 2007 and tried to break it for five days but failed
and so started to go up on 23 Dec 2007. It touched the 23.60% level when it was going up and
could break it without any problem on 27 Dec 2007.

4. On 31 Dec 2007 it went down to test the 23.60% as a support. On 2 Jan 2008 it failed and went
up.

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