21st May 2022

What is Fibonacci Retracement Calculator

What is Fibonacci Retracement Calculator

A Fibonacci retracement calculator is an online tool that can help you to calculate the Fibonacci retracement levels and Fibonacci extensions levels of a stock. It provides data for both uptrend and downtrend.

fibonacci level calculator
Fibonacci level calculator – intradayscreener.com

Before learning about the Fibonacci retracement and Fibonacci extension you need to know about the Fibonacci series.

What is Fibonacci Series?

The Fibonacci series is a set of numbers that starts with zero or one and continues the series. Its series is based on the rule that each number will equal the sum of the previous two numbers. Fibonacci series can also be applied to the stock market.

Fibonacci Sequence = 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987, 1597, ……

The Fibonacci series can identify the support and resistance levels by considering Fibonacci numbers in multiple timeframes. Leonardo Pisano named the Fibonacci series. He is an Italian mathematician. 

What is Fibonacci Retracement Level?

  • Fibonacci retracement levels are the horizontal lines used to show areas where the price retracement may occur.
  • The Fibonacci retracement levels can act as a support and resistance for traders and investors.
  • The Fibonacci retracement levels are correlated with a percentage. These percentages will help you to know how much of a previous price movement has retraced.
  • The Fibonacci retracement levels comprise of 23.6%, 38.2%, 50%, 61.8%, and 78.6%.
  • Fibonacci indicator can be used as a confirmation tool to indicate the retracement levels of stock price, commodity price, etc.
  • This indicator can be drawn in various ways, such as it can be represented by joining two price points where a notable impulse has happened. The horizontal lines can be drawn by dragging the recent low price to a current high price on a chart.
fibonacci retracement

Importance of Fibonacci Retracement Levels

Fibonacci retracement levels can be used to 

  • It is used to place orders,
  • It is used to know stop loss 
  • It is used to set the target price.

How to find Fibonacci Retracement levels

To find the Fibonacci retracement levels, you must find the stock’s recent High and Low prices.

• If the stock movement is in an uptrend, you have to select the lowest price of the stock and the Highest price of the stocks

• If the stock movement is in a downtrend, you have to select the highest price of the stock and the lowest price of the stocks

What is Fibonacci Extension?

  • The Fibonacci extension is used to know the target price. It can also help you to know how far a price movement can continue after the retracement.
  • The Fibonacci extension levels are used to find the support and resistance for traders and investors.
  • Traders can use Fibonacci extension levels to understand the price movement if a new high or low occurs in the stocks.
  •  Fibonacci extension levels are determined to have an idea of profit target placement to the trader or investor.
  • Fibonacci extension levels are drawn by connecting three points, whereas Fibonacci recursion are drawn by connecting two points.
Fibonacci Extension

Importance of Fibonacci Extension levels:

• Fibonacci extensions are used in multiple timeframes. These extensions are used in any market like stocks, commodities, crypto, etc.

• Fibonacci extension levels show us the stock’s price area if once the pullback is completed.

• Fibonacci Extension levels can be drawn on various price fluctuations. When multiple extension levels converge at one price, that area is very important.

How to find Fibonacci Extension levels

To find the Fibonacci extension levels, you must find the stock’s recent High and Low prices.

  • If the stock movement is in an uptrend, you have to select the stock’s lowest price and the highest price of the stocks. After that, click on the reverse in the Fibonacci settings.
  • If the stock movement is in a downtrend, you have to select the stock’s highest price and the lowest price of the stocks. After that, click on the reverse in the Fibonacci settings.

Difference Between Fibonacci Retracements and Fibonacci Extensions

  • Fibonacci retracement shows how long a retracement occurs, whereas Fibonacci extension shows how far a price movement can continue after the retracement.
  • Fibonacci retracement calculates the pullback within the trend, whereas Fibonacci extension calculates the trend fluctuations in the direction of the trend.
  • For example, If a stock price goes from 100 to 200, pullback occurs at 150. The movement from 200 to 150 is known as a retracement. If the stock price moves upwards from 200 and reaches 300, it is known as the Fibonacci extension.
Difference between fibonacci extension and fibonacci retracement

How to use the Fibonacci Retracement Calculator?

A Fibonacci Retracement calculator usually has three input sessions. They are:

  1. High
  2. Low
  3. Constant

Firstly, You have to enter the values of High, low and constant and then you can determine the values of fibonacci retracement and fibonacci extensions.

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