Fibonacci analysis is used by a lot of traders to identify key support and resistance levels. They are often used when there has been a strong trend followed by a brief countertrend. During this brief countertrend key fibonacci retracement levels are used to identify where the initial trend is likely to continue.

The main retracement levels are 23.60%, 38.20%, 50% and 61.8% but the most significant ones are the 50% and 61.8% retracement levels because it’s amazing how often the price bounces off one of these levels.

To demonstrate this point I can highly recommend you watch the latest video from Adam Hewison which shows you how well the price responds to these key fibonacci levels on major markets such as the gold and crude oil markets.

 

 

Filed under: Commodities

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