For example - if a falling price moves past a Fibonacci retracement
level, it is likely to find support at the next one, and traders monitoring that level (after corroborating the validity of the signal with other technical indicators as well) might want to place a stop-loss order for their trade at that level.
Lower down is the 50 per cent retracement
The following chart illustrates how Fibonacci retracement
can be used.
The GBP/CHF broke above the 200-Day moving average this week for the first time since November 2007 however, the sharp retracement
following suggests that investors are turning bearish against the pair as market participants speculate the Bank of England to take further steps to shore up the economy.
Swiss Franc / Japanese Yen There is clear momentum (RSI) divergence with CHFJPY and the pair is trading at its 50% retracement
of the decline from 105.
The last 2 days' highs have touched the top of a channel and the 50% retracement
of the decline from 107.
4181, the 50% Fibonacci retracement
of the07/18/08 - 10/31/08 decline from the record high above 1.
This is a former 4th wave price extreme and 50% retracement
of the decline from 2.