How do I use Fibonacci retracement?

Hi I would like to answer your question in very simple language and you will know how to use fibonacci retracement and important levels to watch in this tool.

It is very important tool to analyse the market and any market wether crypto, stock, forex , commodity , futures respects fibonacci levels.

Fibonacci tools can be used in uptrend and downtrend market to know the next upside or downside price levels by confirming from the fibonacci levels.

  1. Using fibonacci in uptrend market

As we know market always moves in waves. We use fibonacci in uptrend after first wave to take entry in second correcting wave. We have to pick lowest price level of first wave and highest price level of second wave to apply fibonacci as you can see in image. Price always retraces to one of three golden fibonacci levels 38.2% , 50% and 60%. In this example, price exactly retraces 50% level i.e. 5671$ and bounce back upto higher of last wave price 6900$. If it would break the 6900$ then there was possibilty price would move to next fibo level 127.20% i.e. 7568$ .

2. Using fibonacci in downtrend
As you can see in image, there are 3 down waves and price retraces upto 38.2% (9963$) in second wave and again falling to continue downtrend price movement and when price breaks 100% (9500$) fibo level it goes down to next fibo level 127.8% (9296$) but cannot hold that level for long time and after breaking this level it continue goes down and hold 227.20 (8546$) fibo level and price hold that level for more tha one week before another fall.