Fibonacci Retracement and Extension - Holy Grail in Trading

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Fibonacci Retracement and Extension - Holy Grail in Trading - Did you find the Holy Grail in trading? If you know when to enter the market and when to exit
the market at the right time, you have found the Holy Grail in trading. Fibonacci Retracement and Extensions is the Holy Grail for many traders. They trade
by these Fibonacci Levels. Fibonacci sequence is a famous sequence that appears quite frequently in nature. Fibonacci sequence is obtained by adding the last
two number to obtain the next number. The first two numbers are 0,1. After that just add the last two numbers to obtain the next number. Fibonacci sequence
just develops like 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55,89,144,233,377 and so on.

Ratios obtained by dividing a number in the Fibonacci sequence with the number before it and with two numbers before it are always the same. These two
numbers 1.27, 0.618 and 0.382 are very important and occur frequently in nature. These three ratios are used to construct Fibonacci Retracements and
Extension Levels.

When there is a trend, price action is steadily going higher or lower. In case of an uptrend the price action makes higher highs and higher lows. While in
case of a downtrend, price action makes lower lows and lower highs. This is hard to explain in words visualizing but I will make an effort. It is much better
explained in front of a price chart. In case of an uptrend, price action starts from the support A, goes to resistance B, bounces back retraces itself and
reaches a newer support C somewhat higher than A bounces back and reaches a higher resistance D before it again bounces back and reaches a still higher
support E. So the price action can be broken into these three segments AB, BC and CD.

Now let's start and draw Fibonacci Retracements. From B when price action bounces back, it retraces the past price action and the most likely place for the
new support is one of these Fibonacci levels 0.382, 0.5 or 0.618. Either the price action is bounce back close to ...




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