# Fibo Default Settings: Analyzing the Benefits of Forex Trading

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## What is ⁣ Fibonacci Retracement?

Fibonacci retracement⁣ is a technical analysis term which is used to ​identify potential ​ support levels where ‌a ⁢ pullback in a trend may end and ‌reverse. ⁤It is based on​ the ​numbers ‍found in the Fibonacci sequence, which was developed by medieval mathematician Leonardo Fibonacci. Essential, Fibonacci retracements ​are used to measure the extent of the ⁤pullback in the market trend.

By the Fibonacci sequence, retracements are often calculated by⁢ ratios based on the‌ Fibonacci⁣ sequence. The most common Fibonacci retracement ratios used by traders are⁣ the 38.2%, 50%,‍ and 61.8%. These ​ratios are all based on ⁢the​ Fibonacci sequence and are intended to⁤ identify key levels in the market trend.‌

## How to Use‍ Fibonacci Retracement?

Traders use Fibonacci retracement levels to identify potential⁢ areas of‌ support and resistance in a trading⁢ program. If one takes the peak of ⁤the trend and the trough of the trend‍ and draws a line to connect both points, the point of reversal can be⁣ found by taking Fibonacci ratios of the line. For ‌example, ⁤in a trend from a high of \$100 ⁣to a low of \$20, ⁢the⁤ 50% Fibonacci ‍Retracement level would be found by taking the mid-point of the trend, or \$60 ⁢(\$100 + \$20 = \$120/2 = ⁢\$60).​

In‌ order to identify support​ and resistance levels, ​traders‌ will‍ look for price to reject or ‌reverse around these key Fibonacci ratios.‍ If⁤ price reverses around a 38.2% Fibonacci ratio, traders ‌can use this as an⁣ area of potential​ support ‍or resistance. The same​ applies to the‍ 50% and 61.8% ratios. The 100% ⁢Fibonacci retracement ‍is often‍ considered a target ​area, and⁤ the ⁢idea ⁢is that​ if price surpasses this point,⁤ the trend has reversed completely and price could be ‍heading in ⁢a⁢ different ⁢direction. ​

## Demark​ Pivot ⁣Points

In addition to Fibonacci ratios, traders can also ⁤look to Demark⁤ Pivot Points (DPP) for determining areas of potential support ‍and resistance. DPP is a trading strategy‌ based on pivot points, ⁣which are points on the ⁢chart that represent a potential turning point in the trend. Traders look ‍for DPP points to⁤ act‌ as areas of support or resistance in the price action, and ⁤often ⁣combine DPP with Fibonacci ratios in ⁤order to get a better idea of where the trend may go next.

For example, if⁤ a trader is watching a downtrend and the⁤ 38.2% Fibonacci retracement ⁢is coinciding with ​a DPP level, this could ​be an indication that ‌the trend​ will continue in the same direction. Conversely, if the 50% or 61.8% Fibonacci retracements are coinciding with a DPP,​ this could be an indication that ‍the ‍trend may be reversing. Therefore,‌ traders‌ may use DPP​ in ‌conjunction with Fibonacci ratios for better⁤ trading results.

In conclusion, Fibonacci retracement levels are⁢ widely ⁢used⁣ by traders for ‍identifying potential‌ areas of support and resistance within the market ‌trend. By using key ⁤Fibonacci ratios in ‌combination with Demark Pivot Points, traders can increase ⁢their chances of successful trading ​results.⁤