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Fibonacci Numbers
Have you ever heard of Leonardo Fibonacci?
No, he didn't paint the Mona Lisa. And he's not the guy behind the counter at Vinnie's Pizza.
Fibonacci was a well-known Italian mathematician who lived from around 1175-1250. He made great contributions to the world of mathematics, including introducing the decimal system to Europe.
He also studied a sequence of numbers that has since become known as the Fibonacci Numbers, or the Fibonacci Sequence.
The Fibonacci Sequence start with a 0 and a 1, and each new number is the sum of the two previous numbers (0 + 1 = 2, 1 + 2 = 3, 3 + 2 = 5). The first numbers in the sequence are as follows:
0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144...and so forth into infinity.
Fibonacci found that these series of numbers and their ratios to one another were prevalent throughout nature and can in fact be seen all around you.
Ok, ok, so what does this have to do with forex trading?
Well, quite a bit in fact. You see the ratios that are found in the Fibonacci numbers can be seen in the price movement of currencies (as well as stocks and other investments).
Without boring you any further, I'll give you the big 3 numbers that you should remember: 0.382, 0.500, and 0.618. There are others, but these are the most significant.
These numbers are used to calculate "retracement levels", which are used by many traders to determine when to place buy and sell orders. Here's how it works:
Assume the price of a currency pair (or a company's stock for that matter) is trending upward. History shows us that prices tend to hit a peak, go into a temporary reversal, and then resume the trend. The reversal is where Fibonacci numbers come in.
The price of a currency that is trending can be expected to reverse back to one of the Fibonacci numbers and then bounce back to continue the trend. If you forecast this correctly you can buy in just before the upward trend continues and score big profits.
The online trading platform you use should be able to chart the Fibonacci numbers for you. You just draw a line from a low point to a high point, and the retracement levels are automatically mapped on the chart for you.
Of course, its not quite as simple as trading when the price hits a Fibonacci number. There are other things to consider:
You don't know which retracement level the price will stop at. If you choose .382 and it drops to .618 you could lose a ton of pips.
Similarly, if you choose the wrong low/high points, the retracement levels will be all out of whack.
And quite frankly, as accurate as they can be at times, sometimes Fibonacci numbers just don't work at all. There are many variables at play in the forex market. You can't rely solely on one method to predict price movement.
Recent Forex News
Technical Analysis
Today's Market Outlook
Hourly structure remains neutral, as the price action still in a range-trading mode, with the downside protected at 1.3200 support zone for now. Brief bounce to 1.3280 so far, needs to clear minimum 1.3292, to improve the near-term outlook and expose key barrier at 1.3320, clearance of which to resume
USDJPY - Bullish Above 80.00
USDJPY Upward pressure in USDJPY is relentless, with only two very mild negative daily performances being posted in the last 15 trading days (since the February 1 low of 76.02). Although signals for sentiment are at overbought extremes (and have ben for some time), any intraday dips are still
Technical Analysis for Crosses
The pair traded negatively yesterday below the resistance for the ascending correction channel to breach the critical support at 125.70; this level represents the neckline for a minor bearish pattern and its full targets reside with the MA 50 at 124.70 which signals that the downside move might be temporarily
Technical Analysis for Major Currencies
The pair continued trading very narrowly during the Asian session as seen on the provided daily chart. This tight range assisted Stochastic to show a bearish tendency; thus, we suggest a potential downside move today but not before clearing 1.3200 areas. Bears should be protected by a daily closing below
Daily FX Report
Currently, we are experiencing a phase of geopolitical tensions, especially in the Middle East, where the political uncertainty is a powder keg waiting to be lit. In view of the imminent oil embargo against the Iran, the oil price climbed close to nine-month high and pushed concerns about a resulting
Newsfeed display by CaRP
Fundamental Analysis
Morning Forex Fundamental
European services and manufacturing output unexpectedly shrank in February, reviving fears the 17-nation currency bloc is heading towards a recession. Preliminary composite purchasing managers' index fell to 49.7 in February from 50.4 in January, said Markit Economics said on Wednesday.
EUR/GBP And USD/JPY Moved Beyond Important Resistance Levels
Currency traders doubted which card to play in the post-Greece era. EUR/USD drifted sideways even as the EMU PMI's disappointed. EUR/GBP jumped above the 0.8422 range top after the publication of the BoE Minutes. USD/JPY extended its gains and regained the 80.00 mark.
Euro Quiet, Holds Onto Gains
The euro recorded moderate gains against most of its major counterparts, as it appears in need of a catalyst, following the agreement on Greece?s bailout on Tuesday. The single currency weathered a series of worst than expected PMI readings, remarkably well. According to an official from the International Monetary Fund
FX Takes A Moment To Consolidate
In the Asian session, regional equities were mixed but the weak sentiment did not spillover into FX. Looking at the Asian bourses, the Nikkei is up 0.44% on the day, the Hang Seng down 0.72%, and the Shanghai Composite up 0.25%, painting a confusing picture for things to come. EURUSD
Asian Market Update
China's benchmark money market rate hit a 5-week high at 6.80% for CNY30B in 6-month deposits. According to analysts China Premier Wen will announce at the March 5th National People's Congress that he will target GDP of less than 8%. GDP growth of 8% has been maintained in China from
Newsfeed display by CaRP
Technical Analysis
Today's Market Outlook
Hourly structure remains neutral, as the price action still in a range-trading mode, with the downside protected at 1.3200 support zone for now. Brief bounce to 1.3280 so far, needs to clear minimum 1.3292, to improve the near-term outlook and expose key barrier at 1.3320, clearance of which to resume
USDJPY - Bullish Above 80.00
USDJPY Upward pressure in USDJPY is relentless, with only two very mild negative daily performances being posted in the last 15 trading days (since the February 1 low of 76.02). Although signals for sentiment are at overbought extremes (and have ben for some time), any intraday dips are still
Technical Analysis for Crosses
The pair traded negatively yesterday below the resistance for the ascending correction channel to breach the critical support at 125.70; this level represents the neckline for a minor bearish pattern and its full targets reside with the MA 50 at 124.70 which signals that the downside move might be temporarily
Technical Analysis for Major Currencies
The pair continued trading very narrowly during the Asian session as seen on the provided daily chart. This tight range assisted Stochastic to show a bearish tendency; thus, we suggest a potential downside move today but not before clearing 1.3200 areas. Bears should be protected by a daily closing below
Daily FX Report
Currently, we are experiencing a phase of geopolitical tensions, especially in the Middle East, where the political uncertainty is a powder keg waiting to be lit. In view of the imminent oil embargo against the Iran, the oil price climbed close to nine-month high and pushed concerns about a resulting
Newsfeed display by CaRP
Fundamental Analysis
Morning Forex Fundamental
European services and manufacturing output unexpectedly shrank in February, reviving fears the 17-nation currency bloc is heading towards a recession. Preliminary composite purchasing managers' index fell to 49.7 in February from 50.4 in January, said Markit Economics said on Wednesday.
EUR/GBP And USD/JPY Moved Beyond Important Resistance Levels
Currency traders doubted which card to play in the post-Greece era. EUR/USD drifted sideways even as the EMU PMI's disappointed. EUR/GBP jumped above the 0.8422 range top after the publication of the BoE Minutes. USD/JPY extended its gains and regained the 80.00 mark.
Euro Quiet, Holds Onto Gains
The euro recorded moderate gains against most of its major counterparts, as it appears in need of a catalyst, following the agreement on Greece?s bailout on Tuesday. The single currency weathered a series of worst than expected PMI readings, remarkably well. According to an official from the International Monetary Fund
FX Takes A Moment To Consolidate
In the Asian session, regional equities were mixed but the weak sentiment did not spillover into FX. Looking at the Asian bourses, the Nikkei is up 0.44% on the day, the Hang Seng down 0.72%, and the Shanghai Composite up 0.25%, painting a confusing picture for things to come. EURUSD
Asian Market Update
China's benchmark money market rate hit a 5-week high at 6.80% for CNY30B in 6-month deposits. According to analysts China Premier Wen will announce at the March 5th National People's Congress that he will target GDP of less than 8%. GDP growth of 8% has been maintained in China from
Newsfeed display by CaRP