Fibonacci Extension Grid, also known as Fibonacci levels, is a trading indicator that graphically shows strong levels on a chart according to harmonic theory.
In the Fibonacci extension grid, you will find retracement levels – 23.6%, 38.2%, 61.8%, 76.4% and extension levels of Fibonacci – 38.2%, 61.8%, 100%, 138.2%, 161.8%. The main number is always 1.618, which defines the harmonic proportion.
Traders actively use Fibonacci levels in trading, often to identify market reversal points after a pullback.
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FAQ
What is the Fibonacci Extension Grid?
The Fibonacci Extension Grid is a technical analysis tool used by traders to identify potential price reversal points based on harmonic proportions.
How are Fibonacci levels used in trading?
Traders use Fibonacci levels to determine key support and resistance levels, helping them make informed decisions about entry and exit points in the market.
Why is 1.618 important in Fibonacci calculations?
The number 1.618, known as the golden ratio, is central to Fibonacci calculations because it represents a natural proportion found in many financial market patterns.
