How to Draw Fibonacci Retracement

Technical Analysis
S
Susanti
19 Aug 2021, 16:03 1,013 Views
About tny.. If the fibo is pulled from the swing to the close candle, is there? What's the difference? 🙏
If it's from the swing, it's still ok for leveling.. But if it's from the close candle, I'm still curious about its function.. Maybe someone knows here?

3 Answer

M
martin 20 Aug 2021, 22:54

@ Susanti:

When applying Fibonacci retracement, it is not recommended to use a combination of reference points, for example, drawn from swing high to close, or vice versa, because the resulting retracement levels will not be accurate.

If initially drawn from swing high, it must end at swing low, or vice versa if initially swing low then end at swing high. If initially drawn from the closing price, it must end at the closing price as well. However, it is recommended to draw Fibonacci retracement lines from swing points (swing high to swing low or swing low to swing high), not from close to close.

Regarding this, please read: Common Mistakes in Using Fibonacci Retracement

 

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Saleho 23 Aug 2021, 16:37
Is Fibonacci better at detecting signal reversals compared to using pin bars?
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martin 25 Aug 2021, 02:47

@ Saleho:

Fibonacci retracement is not to know when a reversal will occur, but to know to what extent the retracement or correction is happening.
For an explanation of Fibonacci retracement, please read: Trading With Fibonacci Theory

To know the possibility of a reversal, you can observe price action such as pin bars or chart patterns that form. However, its validity must be confirmed by the designation of technical indicators. Specifically regarding pin bars, please read: Unveiling Trading Strategies With Pin Bars

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