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Fibonacci ratios in financial markets Part II
29-01-2018 | No Views : 238
In the first part of the Fibonacci ratios in financial markets, we discussed the importance of these ratios and their presence in nature. We also discussed the main ratios used in financial markets, with examples.
In this section, we will address the secondary ratios with the explanation of the Fibonacci tools available on the MetaTrader platform. We will also explain the importance of this effective tool in confirming the entry when combined with other technical analysis tools, thus increasing the expected price movement.
Secondary Fibonacci ratios used in financial marketsWe will address the most important secondary ratios used in the technical analysis of financial markets, which have the use of the extraction of harmonic trading models as well, and secondary Fibonacci ratios are divided into peak levels and static levels.
Corrective level 0.382The corrective level of 0.382 represents the first possible reversal area in the new direction, as the price is above the 0.618 Fibonacci level, raising the possibility of price action continuing in the new direction.
The failure of the price to exceed the 0.382 Fibonacci, is a sign of the possibility of failure of the new trend to continue and the return of the price to the previous direction.
Example of corrective level 0.382The pair touched the 0.382 correction level but failed to breach it, causing the pair to fall again and continue the downside move, as shown on the attached chart.
Example of corrective level 2.24EUR/USD rebounded higher after touching the corrective Fibonacci level of 224, as shown on the chart in the accompanying picture. We note that despite the obvious bearishness, the price reversed after the first correction on the corrective level 2.24.
Example of price reversal from corrective level 3.618In this example, we see that the corrective level 3.618 caused the price to hold steady for a period before falling back sharply, as shown on the EUR / USD chart in the attached picture.
Fibonacci ratios in the financial markets
An example of a 0.5 correction levelIn the clear example, we see that the price has risen to reach the middle of the downside wave, to be present at the corrective level 0.5, as shown on the chart in the accompanying picture.
Fibonacci types on MetaTrader trading platform
- Fibonacci Expansionary Retracement
- Fibonacci expansions
- Time zones
An example of a price reversal from 2.24 with the Ras and shoulders price modelIn the example, it is safe to note that the price fell to close to the 2.24 Fibonacci level and started to form the head and shoulders price pattern. This was a very important signal for the price reversal. This happened as the price climbed to breach the neckline of the pattern, The target level is 1.618.
So we have finished studying the Fibonacci ratios in the financial markets, which will help you identify important support and resistance levels.
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