How can Fibonacci retracement be applied to identify support and resistance levels in cryptocurrency charts?

1 answers

• Feb 18, 2022 · 3 years ago
  Fibonacci retracement is a widely used tool in technical analysis to identify potential support and resistance levels in cryptocurrency charts. Traders plot Fibonacci retracement levels by connecting the high and low points of a trend and then dividing the vertical distance by the Fibonacci ratios. These levels, such as 38.2% and 61.8%, are considered key levels where the price of a cryptocurrency may reverse or consolidate. When the price retraces to one of these levels, it often encounters support or resistance, providing traders with potential entry or exit points. However, it's important to note that Fibonacci retracement is not a foolproof method and should be used in conjunction with other technical analysis tools and indicators to increase the probability of successful trades. Traders should also consider other factors such as market sentiment and news events when making trading decisions.
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