In the cryptocurrency market, Fibonacci is a widely used price indicator in other financial markets as well. What is Fibonacci and how is it used? The answers to the questions are very important because many investors do not know how to use the Fibonacci indicator.
What is Fibonacci?
The Fibonacci sequence, named after the Italian mathematician Leonardo Fibonacci, was introduced in the 13th century. The Fibonacci sequence is formed as a result of adding each number to the sequence with the sum of the two preceding numbers. For example; 0,1,1,2,3,5,8,13… The feature of the numbers in the series is that the division of the numbers in the series by the previous number approximates the golden ratio. The golden ratio is called the mathematical and geometric calculation that provides the balance of harmony with the parts of the image of the beings.
The Fibonacci indicator, or also known as the Fibonacci indicator, is an indicator based on the Fibonacci sequence, which is frequently used in crypto money markets and all other financial markets. It is used to identify possible support and resistance levels on an asset’s price chart. Fibonacci is a tool that serves a variety of users, be it expert traders or beginners, stock market traders or cryptocurrency traders.
Fibonacci, which is very useful for analysis, meets the various needs of investors and works on all financial investment instruments. Technical analysis is extremely popular among financial market traders because it can be applied to all timeframes. The most commonly used Fibonacci levels are extension and correction levels.
How to Use Fibonacci Indicators
The Fibonacci sequence numbers in the indicator are shown in percentages with special ratios. These rates are; 0%, 23.6%, 38.2%, 61.8%, 78.6% and 100%. Investors consider that 50% is also an important ratio. For this reason, it is used in the Fibonacci indicator. To use the Fibonacci indicator, the top and bottom points of an asset are determined in a price chart in a certain time range. The bottom point on the rise is 1, in other words 100%. The peak is 0, that is, 0%. In a downtrend, the opposite works. Fibonacci lines represent possible resistance and support levels that the price will face. These levels are called Fibonacci retracement levels.
Correction levels are levels that traders can consider to identify entry and exit points and set stop losses. In addition, traders can use Fibonacci retracement levels for buy or stop loss in an uptrend. In addition, the Fibonacci indicator can be used in correction levels as well as in determining extension levels. Extension levels indicate how far the price of an asset will rise after a correction. These levels can be preferred by investors as profit taking targets. The Fibonacci indicator is a widely used tool. It is also an indicator that gives effective results. However, the Fibonacci indicator is subjective and not based on any logic. It is simply the result of a mathematical operation. In the Fibonacci indicator, as in other indicators, it should be used with other indicators in technical analysis and macro factors should be taken into account.
Which Sites Have The Fibonacci Indicator?
The Fibonacci indicator is a tool used to predict when price movements in a financial market will tend to recover. In crypto, the Fibonacci indicator is used to detect reversals of trends in the market and to signal for buying or selling at these points. In other words, buying and selling timing can be done by looking at the Fibonacci charts of a coin. Fibonacci indicator can be used on websites such as TradingView and Investing.
Fibonacci Indicator in Technical Analysis
The correct use of the Fibonacci indicator in technical analysis makes it easy to predict trends in financial markets. For this, after selecting the Fibonacci Time Zones toolbar, it is necessary to mark the first exit point on the chart. After the sign, perpendicular lines appear following the cursor. These lines, whose distance in the horizontal plane is maintained by keeping the golden ratio to each other, are placed one after the other in the time plane. In this way, the bottom and top of a price that has risen or fallen between any two points will be automatically defined. Thus, it will be tried to understand in which time periods along the graph can be considered important movements.
Technical analysts, on the other hand, think that every ongoing price move is caused by the shadow of many past behaviors. Therefore, the entire pricing history is considered to contain many interconnected events. Current action has the potential to influence all future behavior. For this reason, Fibonacci Time Zones stands out as a tool that relates the past and the future on a time scale, although it is not used very often.
Who is Fibonacci?
Leonardo Fibonacci was born in the 12th century in Pisa, Italy. His father worked as a trade ambassador in Pisa, Italy, and Fibonacci began working with him. In this way, he communicated with mathematicians working in the Islamic world and brought and spread the mathematical knowledge from the Islamic world to Italy. Fibonacci published his work “Liber Abaci” (Book of Abacus) in 1202. This work explained basic mathematical concepts such as four operations and number systems.
Liber Abaci also shows the increase in a family of rabbits in a closed environment, calculated under the ideal assumptions that each pair of rabbits will produce a brood after a month and then produce a calf after 1 month. In the solution of this problem, the sequence of numbers showing the increase in the number of rabbit pairs is called Fibonacci numbers, and the sequence is called the Fibonacci sequence. This sequence of numbers has been known to Indian mathematicians since the 6th century, but was first introduced to Europe by Fibonacci. Fibonacci died in Pisa in 1240.
