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FTI Fibonacci Levels

The Fibonacci sequence is a series of numbers where each number is the sum of the previous two, discovered by Leonardo Fibonacci in 1202. Fibonacci ratios are based on this sequence and indicate probable support and resistance levels in financial markets. A retracement occurs when the price temporarily reverses within a trend. Fibonacci retracements display horizontal lines at Fibonacci ratio percentages to identify potential support or resistance areas where the price may retrace before continuing in the original direction. Traders can use breaks of Fibonacci retracement levels as signals to buy or sell.

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Sundaresan Subramanian
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246 views6 pages

FTI Fibonacci Levels

The Fibonacci sequence is a series of numbers where each number is the sum of the previous two, discovered by Leonardo Fibonacci in 1202. Fibonacci ratios are based on this sequence and indicate probable support and resistance levels in financial markets. A retracement occurs when the price temporarily reverses within a trend. Fibonacci retracements display horizontal lines at Fibonacci ratio percentages to identify potential support or resistance areas where the price may retrace before continuing in the original direction. Traders can use breaks of Fibonacci retracement levels as signals to buy or sell.

Uploaded by

Sundaresan Subramanian
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Fibonacci Sequence, Ratios and

Retracements

May 23, 2014 in School

 
The Fibonacci sequence was discovered by Leonardo Fibonacci da Pisa. In
the year 1202, he wrote a book called “Liber Abaci” which introduced the
sequence to Western European mathematics. The Fibonacci sequence is a
series of numbers: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144 and on to
infinity.
The formula for the Fibonacci series is: Fn = F(n-1) + F(n-2) where “F” is
the Fibonacci number and “n” is its order in the sequence. Except for the
first two numbers, each value in the sequence is the sum of the two values
before it.
Fibonacci ratios are based on the Fibonacci series. It is the mathematical
relationship of a number from the sequence to any of the numbers before
or after it. The Fibonacci ratios are 0%, 23.6%, 38.2%, 50%, 61.8%, 78.6%
and 100%.

All the emotions that occur in the markets are within some definable limits,
most of them recorded in statistical series. This is where Fibonacci comes
in. In trading, Fibonacci ratios can provide probable levels of support and
resistance.
A retracement is as a temporary price reversal occurring within a prevailing
trend. The Fibonacci ratios are used as retracement levels that indicate
probable levels of support or resistance. Each level is considered a potential
area of retracement before the price continues to move in the original
direction. Fibonacci retracements are displayed using horizontal lines that
indicate the levels of Fibonacci ratios. You can add more levels if you want.
Here is an example in an uptrend. As you can see, the price retraced to the
50% level and a few times to the 38.2% level.
 

In my system, I have added other values to the usual Fibonacci levels. All in
all, I use 0.0, 13.0, 23.6, 38.2, 41.4, 50.0, 61.8, 70.7, 78.6, 88.6, 100.0,
113, 127, 141.4, and 161.8. Each level can serve as either support or
resistance levels that the price may respect or break.
In an uptrend, the Fibonacci tool is applied from the lowest low (point A) to
the highest high (point B), where you can see 0.0 level at the top. It’s the
opposite with a downtrend where you apply it from the highest high (point
C) to the lowest low (point D), and the 0.0 level is at the bottom.
You will notice that there are two sets of numbers on
the Fibonacci retracements above. The price value is the set of numbers on
the left side, and the Fibonacci levels are the ones to the right.
When the price is moving in an uptrend and retraces then touches a
Fibonacci level, it will most probably bounce back up. When price does this,
it’s a good idea to buy. In the example, the price retraced to the 23.6 level,
turned around and continued to go up.
On its way up, it breaks the upper Fibonacci level, which is the 13 level.
This indicates that the price will continue to go up. However, if it goes
below the 23.6 Fibonacci level, the price is more likely to continue going
down until it reaches another Fibonacci level and goes back up. When the
price does break that level, it’s a good idea to sell.
In the next example, the price exceeded the 13.0 and 23.6 levels. You can
sell there and target any of the next Fibonacci levels.
The opposite applies to a downtrend.

In the example, you can see that price retraced and broke the 13.0 level;
this is a buy signal. The price continued to the 41.4 level and bounced
down; this is the sell signal. It kept going down and broke the 23.6 level.
This is another signal to sell.
 

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