There are several types of horizontal inflection points that can be employed in forex technical analysis. Among these, the most common ones are the psychological round numbers, which tend to hold well as support or resistance for major currency pairs and yen pairs. Major psychological levels refer to price levels ending in 00, such as … Continue reading Different types of inflection points
Fibonacci retracement levels, which are commonly used to specify potential entry levels during a trending market environment, comprise another group of inflection points. These retracement levels were based the work of Leonardo Fibonacci, who is a famous mathematician known for his discovery of the golden ratio. According to Fibonacci, this ratio describes the natural proportion … Continue reading Fibonacci Retracement
As introduced in the previous section, Fibonacci extension levels serve as excellent points for setting profit targets. After all, it’s not enough that you try to pick the best entry levels for your trade. You must also be able to determine how long you plan to hold on to the trade or how long you … Continue reading Fibonacci extension
This section further illustrates how the Fibonacci retracement and extension levels tend to have a higher probability of holding when they coincide with other types of support and resistance. For instance, a price breakout tends to pull back to the broken support or resistance level as a retest. A downside break from a key support … Continue reading Using the Fibonacci tool with support and resistance
As discussed in the previous sections, Fibonacci retracement is often used during trending market environments so it makes sense to combine it with the use of trend lines. Of course this also requires one to be able to draw trend lines properly, and the rule of thumb is to use one that has already been … Continue reading Using the Fibonacci tool with trend lines
