Fibonacci Retracements

Fibonacci retracements are based on the mathematical relationships, expressed as ratios, between the numbers in the key numbers identified by mathematician Leonardo Fibonacci. In technical analysis, Fibonacci retracements are created by taking two extreme points (usually a major peak and trough) on a chart and dividing the vertical distance by the key Fibonacci ratios of 23.6%, 38.2%, 50%, 61.8% and 100%

A quick introduction on how to use them can be found on www.swing-trade-stocks.com.

Some things I learned while using them to trade:

• On some markets price almost always bounces (for at least a bit) at the 50% level of the most recent move visible on a 15 or 30 minute chart. In that case, a logical target is the -23.6% level of that same move. This method is very useful on markets like the ES and bonds. The EUR is a bit more erratic, and seems to prefer the 61.8% level.
• When markets move really fast, it can be useful to draw these retracements from the high or low of the 2 previous swings (instead of from high to low or low to high).