how to use the fibonacci sequence
the fibonacci sequence can be applied to finance by using four techniques including retracements arcs fans and time zones fibonacci retracements require two price points chosen on a chart usually a swing high and a swing low once two points are chosen the fibonacci numbers and lines are drawn at percentages of that move if a stock rises from 15 to 20 then the 23 6 level is 18 82 or 20 5 x 0 236 18 82 the 50 level is 17 50 or 15 5 x 0 5 17 50 image by sabrina jiang investopedia 2021fibonacci retracements are the most common form of technical analysis based on the fibonacci sequence during a trend fibonacci retracements can be used to determine how deep a pullback may be traders tend to watch the fibonacci ratios between 23 6 and 78 6 during these times if the price stalls near one of the fibonacci levels and then start to move back in the trending direction an investor may trade in the trending direction arcs fans and time zones are similar concepts but are applied to charts in different ways each one shows potential areas of support or resistance based on fibonacci numbers applied to prior price moves these supportive or resistance levels can be used to forecast where prices may fall or rise in the future 