Fibonacci retracement is a build in tool
in Metatrader 4 and very helpful in determining potential areas of support and resistance. When Fibonacci
retracement installed properly on the chart will often will show the bounce area in the chart but
sometimes also break
when the price penetrates support or resistance area in the strong trend then headed to next
potential area. There are several levels of Fibonacci
retracement is often used by traders as follows:
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| Fibonacci Retracement
Seen in the
picture there are 6 levels in Fibonacci retracement used often in MetaTrader 4
those are 0.0, 23.2, 38.2, 50.0, 61.8, 100.0 of levels. That's the Fibonacci
levels are often used and is a reference to determine potential areas of
support and resistance.
In using
Fibonacci Retracement traders needs to understand well about knowledge in
determining the swing high and swing low due to the fibonacci lines are formed
based on the swing high and the swing low that have been selected as the
highest fibo level and the lowest fibo levels. Traders can attached the
Fibonacci retracement tool in the chart with the following way:
1. Find the
tool on the Insert menu > Fibonacci > Retracement then select it
2. Always start
from left to right
3. Discover The
swing high
4. Discover The
Swing low
5. Fibonacci
retracement has been formed with the support and resistance lines potential
Then there are
a few settings in the properties of Fibonacci retracement you need to know, for
example, the Common tab as seen like the image below:
Name : the name of the Fibonacci
Description :
to provide description is from the Fibonacci but not a must
Style : To change the color, line type and thickness of
the lines on a diagonal line connecting the swing high and swing lows
Then there are
also fibo levels tab that allow you to do some settings such as:
Add : to
increase the number of levels from levels that already by default appear on the chart
Style : change
the appearance, color, thickness or type of line
It’s little bit
easy to use the Fibonacci retracement. You just need to consider to determine
swing high and swing low then the Fibonacci levels will be formed and if you do
that incorrectly the potential support and resistance you made
was wrong. So you need more practice in high and low to expert in this case.
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