
How Fibonacci Trading Works
Fibonacci trading is a concept in the technical analysis of a security. Fibonacci trading is nothing but identifying support and resistance levels that will most likely trigger a price reversal.
The golden mean or phi is a result of the Fibonacci numbers. This proportion divides a measured wave such as price and gives potential levels of support and resistance. These levels signal a high probability of a reversal.
It is not always easy to understand the ins and outs of the financial market. This is especially true when the understanding and application of complex analytical methods becomes involved.
In this article, we will look at the history and background of Fibonacci numbers and The Golden Ratio.
We will then outline three specific money management tips that can help increa