Forex Fibonacci retracements are a popular trading tool used by traders to identify potential support and resistance levels in the market. The Fibonacci sequence is a mathematical formula that is found in nature and is used to identify the potential reversal points in the market. The sequence is based on the ratio of numbers, where each number is the sum of the two preceding numbers. This sequence is then represented as a percentage, which is used to identify the potential reversal points in the market.
Adding the 88.6% retracement level to the Fibonacci sequence can provide traders with an additional level of support and resistance. The 88.6% retracement level is considered to be a strong level of support and resistance, and is often used by traders to identify potential reversal points in the market.
To add the 88.6% retracement level to the Fibonacci sequence, traders must first identify the high and low points in the market. Once these points have been identified, traders can then use a Fibonacci retracement tool to draw the Fibonacci levels on the chart.
To add the 88.6% retracement level, traders must first calculate the distance between the high and low points in the market. This distance is then multiplied by the 88.6% retracement level, which gives the trader the price level at which the 88.6% retracement level will occur.
For example, if the high point in the market is 1.5000 and the low point is 1.4000, the distance between these points is 100 pips. If the trader wants to add the 88.6% retracement level, they would multiply 100 pips by 0.886, which gives them a price level of 1.4776.
Traders can then use this price level to identify potential reversal points in the market. If the market reaches this level and begins to show signs of reversal, traders can use this as a potential entry or exit point.
It is important to note that while the 88.6% retracement level can be a strong level of support and resistance, it should not be relied upon exclusively. Traders should always use multiple indicators and analysis methods to confirm potential reversal points in the market.
In conclusion, adding the 88.6% retracement level to the Fibonacci sequence can provide traders with an additional level of support and resistance in the market. By calculating the distance between the high and low points in the market and multiplying it by the 88.6% retracement level, traders can identify potential reversal points in the market. However, traders should always use multiple indicators and analysis methods to confirm potential reversal points in the market.
