Fibonacci Application in Financial Markets

Oct 19, 2020 6:15 PM +02:00Richard Snow, Analyst

The word “Fibonacci” often appears in trading and it is likely that you have already seen or
heard of it - for good reason. Fibonacci numbers are numbers that are arranged according
to a specific formula to create a unique numerical sequence. Within the sequence lies the
Golden Ratio of 1.618, which appears frequently throughout nature and is also used
extensively in technical analysis, along with other Fibonacci numbers and ratios, to help
identify areas of support and resistance.

FIBONACCI FOUNDATIONS, APPLICATIONS IN THE WORLD AROUND US

Object 1

Fibonacci numbers get their name from the Italian mathematician who discovered them, ‘
Leonardo Fibonacci’ in the thirteenth century. While his book “Liber Abaci” introduced the
number sequence to the Western world, traces of it can be found as early as 200 BC in
Indian mathematics.
The number sequence starts with 1 and each number in the sequence can be arrived at by
adding the two previous numbers in the sequence.
Fibonacci_sequence: 0,1,1,2,3,5,8,13,21,34,55,89,144,233,377,610,987,1597,2584,4181,765
,1094,17711
Fibonacci in nature:
Sunflower seeds have a very distinct spiral pattern to their make-up. Later on in the math
section, we discuss the spiral feature of the Fibonacci sequence. Also, sunflowers tend to
have 34 spirals in total, a Fibonacci number.

Daisies are typically found to have 34, 55 or 89 petals – all Fibonacci numbers.

Extreme weather patterns have a tendency to form spirals, therefore, their very structure
comprises of Fibonacci.

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Other examples where Fibonacci numbers can be observed, include: music, art (Mona
Lisa), architecture and biology. Right now, you can look down at your hands to notice that
you probably have eight fingers, five digits on each hand, three bones in each
finger, two bones in each one thumb and one thumb on each hand (8, 5, 3, 2, 1, 1).

FIBONACCI: THE MATH

The diagram below shows a visual representation of the Fibonacci spiral, often seen in
nature, when applying it to area calculations. For example, the spiral starts from within a
1x1 square (the first Fibonacci number is 1), then moves to another 1x1 square (the
second Fibonacci number is also 1), before moving on to a 2x2 square (the third Fibonacci
number) and so on. The spiral is seen when connecting each additional square by drawing
a curved line through the diagonal of each new square.

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Fibonacci numbers are fairly significant on their own, however when analyzing the ratios
that exist among the infinite number sequence, the real value of Fibonacci becomes clear.
The Golden Ratio:
Take any number in the sequence and divide it by the number before it and the answer will
be 1.618, or close to this number for the numbers from 1 to 55 in the sequence. This is
often referred to by the Greek letter ϕ “Phi”.
Examples:
a/b = ϕ
17711/10946 = 1.61803
6765/4181 = 1.61803
21/13 = 1.6154 (less approximate for numbers 55 and lower)
FIBONACCI APPLICATION IN FINANCIAL MARKETS
While the application of Fibonacci in nature keeps many graduate level mathematics
students busy, traders have more pressing concerns: Applying the study to financial
markets. In its most common form, Fibonacci makes use of mathematically relevant ratios
to project possible areas/zones of support and resistance.

Refer to the USD/SGD daily chart below as an example where the Fibonacci retracement

drawing tool has been applied to a significant move (bottom to top). To reduce clutter on
the chart you will notice only the 0, 38.2, 50, 61.8 and 100 percent markers are shown.

Fibonacci in the Forex Market

Oct 19, 2020 7:02 PM +02:00Warren Venketas, Analyst

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FIBONACCI IN THE FOREX MARKET
Forex traders utilize Fibonacci retracements to aid in identifying possible key levels
of support and resistance. These levels are used as guidelines for traders looking to enter
or exit the market along with appropriate risk management techniques.
HOW TO CREATE A FIBONACCI RETRACEMENT ON A FOREX PAIR
Before delving deeper into practical examples, traders need to have a basic view of the
overall market being analyzed (EUR/USD or USD/ZAR etc.). This starts by identifying the
trend; this can be long, medium or short-term depending on trading style. There are various
methods that can be used to identify the trend such as simple price action, indicators
like Moving Averages (MA) , as well as other methods. The reason why identifying the
trend is important is because the Fibonacci tool itself does not determine a trend bias,
rather it identifies key support and resistance levels.
Further your knowledge on trend trading
Implementing the Fibonacci retracement requires identifying a large move either up/down
on the forex price chart. This will produce key levels using Fibonacci metrics. The dueling
nature of a forex pair has the tendency for mean reversion, which can produce major
moves from which Fibonacci retracements can be drawn.

The key levels to look out for are the 38.2% and 61.8% respectively. The 50% level is not
technically a Fibonacci level but is often included in charting packages and regarded as an
important threshold. This level simply marks half the market move between the initial high
and low or vice versa. The chart below shows a simple implementation of the Fibonacci
retracement on a GBP/ZAR daily chart. Highlighted in black are the respective low to
high points which are used to plot the Fibonacci levels.
GBP/ZAR daily chart – uptrend:

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<alt image desc> GBP/ZAR daily chart with Fibonacci
Chart prepared by  Warren Venketas, IG
Traders may also utilize the Fibonacci retracement from a high to low price level as
expressed on the USD/SGD chart below.
USD/SGD daily chart – downtrend:

<alt image desc> USD/SGD Daily chart with Fibonacci

Chart prepared by  Warren Venketas, IG charts
Once the Fibonacci retracement is drawn, traders can use these price levels for
possible entry and exit signals. The USD/CAD example below shows how price action
tends to revert to the various Fibonacci levels. The blue rectangle highlights the area
between the 61.8% and 38.2% Fibonacci levels. It is evident that price respects these two
key support and resistance points. Traders may look to enter into short positions at the
61.8% - as a result of the preceding downward trend, with initial support coming from the
38.2% level.
It is important to note that the Fibonacci points should not be seen as concrete levels but
rather guidelines or reference points. Price will not always trade at these exact levels. It is
common to see price just falling short or pushing passed a level which can frustrate
traders who look at exact levels. With reference to stop and limit orders, traders should
give themselves some leeway for potential price fluctuations around the Fibonacci level.
The chart below shows an example of this above the 23.6% level (yellow) where bulls are
seen pushing price up but quickly reverting back down below the 23.6% level.
USD/CAD daily chart:

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<alt image desc> USD/CAD Daily chart with Fibonacci
Chart prepared by  Warren Venketas, IG Charts
This is the most simplistic form of the Fibonacci retracement within forex markets. The
versatility of the Fibonacci retracement function means that it is not limited to one time
frame as seen above. A more complicated approach involves several Fibonacci
retracements across different time frames. Instituting multiple time frame analysis can
allow for multiple Fibonacci retracements drawn from major moves. The next article in the
Fibonacci series will go into more depth with and practical examples to show how exactly
traders can implement this strategy.
FIBONACCI RETRACEMENTS TO HELP TO SEE THE BIGGER PICTURE
Forex traders often make the mistake of relying solely on Fibonacci levels to take positions
in the market but this can be detrimental as this can make them too one dimensional.
Additional support from other indicators, chart patterns, candlestick patterns and
fundamentals are essential to formulate a better overall strategy; and ultimately a well-
informed trade decision. The Fibonacci can be an extremely powerful tool in forex trading
so fully understanding its foundations can be beneficial to any trader looking to implement
the tool within their trading strategy.
If you would like to try drawing Fibonacci retracements, this tool is available on IG’s
platforms, and can be accessed with a demo account. To sign up for a demo account with
IG Group, please click here.

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From the peak, the drawing tool shows price action struggling to make a clear directional
break below the 38.2% level – the reciprocal of the 61.8% ( 1 - 0.618 ). Price hovered
around until a decisive breakdown toward the 61.8% level which acted as support.
This example shows how the 38.2 and 50 percent levels are less significant than the 61.8%
level - which acted as a major level of support. While Fibonacci levels are not perfect,
meaning price action may move through the defined levels, it is still a very useful indicator
revealing where a particular market may run into support and resistance or consolidate
before breaking into a fresh trend.
If you would like to try drawing Fibonacci retracements, this tool is available on IG’s
platforms, and can be accessed with a demo account. To sign up for a demo account with
IG Group, please click here.

Fibonacci Retracements in Multiple Time Frame Analysis

Oct 20, 2020 6:01 PM +02:00Tammy Da Costa, Analyst

FIBONACCI ANALYSIS: INTRODUCTION

Although Fibonacci analysis stems from mathematics, it is also applicable to technical
analysis, the premise of which implies that history repeats (to a degree) and that prices
often move in trends. By combining Fibonacci analysis with multiple-time frame analysis, a
trader may be able to adopt a better understanding of the overall trend as while identifying
possibly key levels of support and resistance.

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This article will discuss the application of Fibonacci Retracements using multiple time
frames, focusing on how these levels may provide inflection points as support and/or
resistance levels.

FIBONACCI APPLICATION ON MULTIPLE TIME FRAMES

Many traders often ask what time frame is most suitable when assessing current market
trends, unaware of the benefits of multiple-time frame analysis, which allows a trader to
analyze a single financial instrument using multiple vantage points. Long-term charts
include much larger sample sizes which can reduce the amount of ‘noise’, often providing
a more holistic view on the market. However, short-term charts provide a general overview
of the current trend and short-term market dynamics, which is useful when seeking
potential entry and exit points. It is often found that Fibonacci retracement levels from
both the long and shorter time frames, will result in key levels of support and resistance,
an example of which can be seen below.
The EUR/USD monthly chart below highlights the Fibonacci retracement (blue) from the
September 2000 low to the March 2008 high. This move represents the historical high and
low which have yet to be violated.
As demonstrated below, from a long-term perspective, the Fibonacci retracement has
provided strong areas of support and resistance, with price action often shorter-term
inflections off of these longer-term support/resistance levels.

EUR/USD Monthly chart

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FIBONACCI RETRACEMENT LEVELS TO LOCATE INFLECTIONS
After the historical move has been identified, the weekly chart can then be used to locate
other key major moves and potential inflection points.
Following on from the EUR/USD example, the weekly chart below now includes Fibonacci
levels from two additional major moves. The first Fibonacci retracement (pink) is taken
from the January 2017 low to the February 2018 high (the medium-term move), while the
second Fibonacci retracement (orange), represents the shorter-term move between the
February 2018 high and the March 2020 low.
EUR/USD Weekly Chart

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As demonstrated above, there are multiple instances where these levels have provided
clear areas of support and resistance, highlighting the formation of inflection points on
numerous occasions, often driving a penchant for mean reversal. Although all retracement
levels provide information, the golden ratio 0f 61.8% and it’s reciprocal, 38.2%, are strong
levels to bear in mind when using Fibonacci retracements for the purposes of trend
continuation, often providing potential signs of a pullback in trend or a start of a new trend
altogether once these levels are broken.
PUTTING IT ALL TOGETHER WITH FIBONACCI APPLICATION ON MULTIPLE TIME
FRAMES
Now that we have identified the strong levels of support and resistance from the long-term
charts, the daily chart can be used to represent the way in which these levels have
impacted short-term price action. From a visual perspective, the EUR/USD daily charts
demonstrates how these levels have impacted moves in the short-term, with price action
exhibiting a number of inflections at these levels.

EUR/USD Daily Chart

H2: Confluence with Fibonacci and Support and Resistance

Although the Fibonacci retracement has been used in isolation throughout this article, the
accuracy of analysis may be even more powerful when meshed together with another
mechanism of support/resistance identification such as psychological levels and/or prior
price action swings.
The EUR/USD daily chart below, now highlights how Fibonacci is not the only mechanism
of support/resistance. A closer look at the chart shows how the 50% retracement of the
medium-term move helped catch the top of the March 2020 high and stalled the move in

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July before the bullish breakout which persisted until price action came into a wall of
resistance at the psychological level of 1.1800 which then became a key level of support.

EUR/USD Daily Chart

SUMMARY
• Fibonacci retracements levels may provide key support and resistance levels

• Multiple time analysis may improve efficiency of analysis

• Fibonacci retracements may be more powerful when used in conjunction with other
technical tools

If you would like to try drawing Fibonacci retracements, this tool is available on IG’s
platforms, and can be accessed with a demo account. To sign up for a demo account with
IG Group, please click here.

Fibonacci Projections
Oct 20, 2020 6:14 PM +02:00Richard Snow, Michael Boutros

HOW TO USE THE FIBONACCI EXPANSION TOOL WHEN TRADING

The Fibonacci extension, much like the Fibonacci retracement, makes use of Fibonacci
numbers and ratios when mapping out possible future levels of support and resistance.
This is a useful tool when anticipating trend continuation after the retracement of a strong
initial move and can be applied to any market.

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Fibonacci Extension Explained
This article builds on the foundational knowledge of Fibonacci retracements and Fibonacci
numbers in general. Therefore, it is strongly recommended that you familiarize yourself
with these concepts by reading our introductory article in the Fibonacci sub-module.

Fibonacci Spiral Highlighting Key Fibonacci Numbers and the 1.618 Ratio

While the familiar Fibonacci Retracements are used to determine how far the price may
retrace the original move, Fibonacci Expansions can help us determine where price might
head after the retracement is completed.

Applying the Fibonacci Extension to Price Charts

The Fibonacci expansion or Fibonacci extension can be applied to price charts in three
simple steps. Once the Fibonacci tool has been selected, you will need to click on three
points on the chart in the following sequence:
In uptrends, your reference points will be a low (A), high (B), low (C). Respectively, in
downtrends, your refence points will be a high (A), low (B), high (C).

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1. The base of the large primary move: Point ‘A’ shown in the DXY chart below, depicts
the base of the original/primary move

2. The peak of the primary move: Point ‘B’ depicts the peak of the primary move and
the beginning of the retracement.

3. The end of the retracement - the swing low: Point ‘C’ marks the end of the
retracement and the last of the three points for the Fibonacci extension tool. Point
‘C’ is marked with a reasonable degree of confidence based off the strong move in
the direction of the primary move shown by the long green candle.

• Primary move: The line connecting point A to point B, i.e. line AB.

• The retracement: Line BC

• Trend continuation: Starts from point C and projects Fibonacci extensions of

possible support / resistance levels in the direction of the primary trend.

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How to Apply the Fibonacci Extension when Trading
The chart below shows the standard Fibonacci levels/ratios as well as point ‘D’ which has
been added to depict a 100% advance or ‘extension’ from the low of the retracement line
BC in the direction of the primary move. The CD line is the same length as the AB line.

Taking a closer look, there are levels or broader zones on the chart below where price
paused near Fib levels that acted as support or resistance. Of particular importance is the
61.8% level- these levels can provide potential areas of support or resistance for
future price action and should be monitored closely.
For instance, a bullish trader entering the market soon after the swing low at C may look to
the 61.8% level as an initial exit point while the 100% extension (point D) may serve as an
indication of a secondary exit point. Often times corrections in price trends take the shape
of two equal legs and as such, once price exhaustion is identified at the 100% extension,
the focus shifts towards initial support back at the 61.8% extension. The subsequent
charts shows price rebounding off this mark on the pullback as the extension offers
support. Always keep in mind that extensions should be used like basic trendlines – a
break of support turns the level into resistance and vice versa.

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Traders ought to be looking for entries in the direction of the trend, unless price action
reveals otherwise, hence the inclusion of the long trade in this example. But this type of
analysis applies just the same for the short side of the market.
If you would like to try drawing Fibonacci retracements, this tool is available on IG’s
platforms, and can be accessed with a demo account. To sign up for a demo account with
IG Group, please click here.

Fibonacci Retracements for Trend Trading

Oct 21, 2020 4:56 PM +02:00Tammy Da Costa, Analyst

TIMING TRENDS, PLAYING PULLBACKS WITH FIBONACCI RETRACEMENTS

Although markets are unpredictable technical indicators may be used as a guide for price
action, and Fibonacci retracements are commonly used for the purpose of trend
continuation.
This article will investigate that manner of usage, focusing in pullbacks for purposes of
trend resumption.
Further your knowledge on trend trading
HOW TO APPLY A FIBONACCI RETRACEMENT
As with any technical indicator, the correct application of Fibonacci is crucial when
analyzing market trends. While this tool can be applied to any time frame, the application
of Fibonacci Retracements on multiple time frames, may help to improve the accuracy of
analysis, forming a holistic view of the market that’s being analyzed.
The first step to applying a Fibonacci Retracement would be to identify the current market
trend, which is where a longer time-frame chart may come in handy. Once a trader has

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identified a prominent move off of a long-term chart (usually a high and low of significant
value that have yet to be traded through), a Fibonacci Retracement can be drawn by
connecting these two points of interest.
With the use of an example below, the EUR/USD monthly chart highlights the Fibonacci
Retracement plotted between the September 2000 low and the March 2008 high. These
two levels are significant as they represent the historical high and low which have yet to be
violated.
From a long-term perspective, these Fibonacci levels have provided support and
resistance for the major currency pair, with price action often finding inflections at these
zones which have been identified by the Fibonacci retracement.

EUR/USD Monthly Chart

INTERPRETING FIBONACCI RETRACEMENT LEVELS

Once the Fibonacci retracement has been applied to a long-term chart, providing a clear
view of the overall market conditions and key levels of support and resistance, a Fibonacci
retracement can then be applied to a more recent move of interest using a shorter time
frame,to help determine potential entry and exit signals.

Now, with the use of a four-hour chart, a Fibonacci retracement can be taken from a more
recent major move. From a short-term perspective, the chart highlights how the 61.8%
Fibonacci retracement level has provided support, with price action bouncing off this level
before continuing the upward move until the 50% retracement came into play. Likewise,

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price action stalled at the 38.2% retracement level and once this level was broken, the
upward trend gained momentum, resulting in a bullish breakout, until reaching
the psychological level of 1.2000.
EUR/USD 4 Hour Chart

For a trader who has entered into a position, these levels may also be used to manage the
risk of the trade. For a trader who is holding a long position, a tight stop may be placed
below the previous retracement level, in the event that the trend reverses towards the
downside. Likewise, a trader who was holding a short position could place a tight stop
above the higher Fibonacci retracement level.
If you would like to try drawing Fibonacci retracements, this tool is available on IG’s
platforms, and can be accessed with a demo account. To sign up for a demo account with
IG Group, please click here.

Trading Ranges with Fibonacci Retracements

Oct 21, 2020 5:22 PM +02:00Richard Snow, James Stanley

TRADING RANGES WITH FIBONACCI RETRACEMENTS

Fibonacci analysis can be applied to financial markets in an attempt to discover potential
future price action, and some may even consider it as a leading indicator. This article
touches on range trading and explores how traders can utilize Fibonacci retracements

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when looking for potential areas of support and resistance that may appear in ranging
markets.

MARKET CONDITIONS: RANGE TRADING

Markets basically have two conditions: Trend and Range. In between there’s a transitory
state of ‘breakout’ that propels a range into a fresh trend.
A ranging market environment develops when price trades between two well-established
areas called support and resistance. Price tends to rise and often touches the area of
resistance before failing to break higher and eventually turns lower. Likewise, price tends
to drop toward support before failing to break lower and subsequently reverses higher.
Witnessing successive instances of price action bouncing off support and resistance is
crucial to establish a trading range.

RANGE TRADING ILLUSTRATION

At DailyFX, we have a dedicated support and resistance page showing areas of support

and resistance for popular markets
For range traders, the possibility of a break above or below the range should never be
discounted. Traders are encouraged to utilize the risk management tools available to them
and adopt various risk management techniques.

ESTABLISHING RANGES WITH FIBONACCI RETRACEMENTS

When an asset advances or declines significantly, creating a major move, there is a
tendency for the market to consolidate as it partially retraces or fully retraces the initial
move. Fibonacci levels can provide clues around areas of potential support or resistance
where such consolidation may take place.
Read our explanatory article on origin of Fibonacci

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The daily GBP/USD chart below presents an area where price had a tendency to range
between two Fibonacci levels. The major move produced in the month of March, 2020
presented a major move from which a Fibonacci retracement could be drawn; and for
approximately four months after, price action showed multiple inflections off of these
retracement levels while prices were mean reverting/ranging. Also added here is the 76.4%
retracement level, which is a commonly included level to be used with Fibonacci
retracements (1-.236 = .764).
Notice how support showed at both 38.2 and 50% retracement levels helped to exhibit
support at various points through the range, which helped to hold the lows after prices
pulled back.
GBP/USD Daily Price Chart (Feb 2020 – August 2020)

These Fibonacci levels correspond to the Fibonacci retracement drawn on the weekly
chart from the 2017 high to the 2018 low, as shown below:

TRADING RANGES WITH FIBONACCI RETRACEMENTS

Returning to the same GBP/USD chart, from left to right, it is clear to see an extended
period of lower highs and lower lows, presenting us with the initial downward trend. This
was followed by a strong pullback that erased more than 50% of that prior major move,
after which price action moved into a range (shown in grey below).
Incorporating prior swing high resistance around 1.2641 helped to further define that
range, and notice how there were multiple inflections at these retracement levels during
the four-month-range that later developed. Towards the right side of the chart, you’ll see an
eventually build of support around the 61.8% retracements; highlighting a higher-low that
eventually led to a topside breakout in GBP/USD.
GBP/USD Four-Hour Chart (March 2020 – July 2020)

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When in a mean reversion/range environment, the trader’s goal is often to concentrate risk
outlay by relying on the possibility of range continuation. As in, if the range is going to
break, the trader would likely want to investigate loss mitigation given that the condition
they were looking to work with no longer applies.
This can allow for relatively tight stop placement, particularly if support is defined by a
Fibonacci retracement level. This can allow the trader to focus on risk minimization when
plotting for range continuation; whether that support is coming from a 38.2, 50 or 61.8%
retracement levels.
If you would like to try drawing Fibonacci retracements, this tool is available on IG’s
platforms, and can be accessed with a demo account. To sign up for a demo account with
IG Group, please click here.

Trading Breakouts with Fibonacci Retracements

Oct 21, 2020 5:42 PM +02:00Warren Venketas, Analyst
TRADING BREAKOUTS WITH FIBONACCI
The breakout market condition is one of the more exciting backdrops because, by
definition, something relatively ‘new’ is happening. It can also be a favored strategy
amongst forex traders because it can allow for outsized moves that may last for an
extended period of time; potentially plotting for a price breakout to develop into a new
trend that may allow for

FIBONACCI BREAKOUTS: INTRODUCTION

Fibonacci retracements are a popular tool to use when looking to exploit
possible breakout opportunities. Identifying key levels inside of trends using Fibonacci
retracements gives traders specific price zones to monitor for price breaks above or below.

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Implementing multiple time frame analysis can aid traders, bymagnifying long-term
information in the effort of finding more granular accuracy in terms of possible entry
points. This article will outline how Fibonacci retracements can be used to identify
breakout opportunities and how other technical analysis techniques can beincorporated to
compliment possible breakout decisions.
HOW TO TRADE RANGE BREAKOUTS WITH FIBONACCI RETRACEMENTS
The GBP/USD charts below exhibit a potential breakout opportunity using Fibonacci
retracements. The first step as always when using the Fibonacci retracement is to locate
the relevant high/low or vice versa and draw the Fibonacci retracement as seen on the
weekly chart (red box, to the left of the chart). This represents a well-defined high to low.
As evident from successive lower highs and lower lows price has tended towards a
downward bias. This step is key as identifying the trend will aid in future trade decisions.
Trend identification can be recognized in various ways such as price action (used below),
oscillators and other technical indicators.
GBP/USD Daily chart:

Chart prepared with Tradingview

Notice how after the major move was in, price action went into a range-bound state; with
fairly clear definition of resistance around the 76.4% retracement to go along with
supports at 38.2 and 50% retracements. Once the longer-term picture has been drawn,
traders can look to focus in on smaller time frame charts for more detail. The eight-hour
chart focuses in on what happened after that major move. GBP/USD began to range for
much of the four months after, with numerous inflections showing off of these Fibonacci
retracement levels. But, by mid-July, towards the right side of the chart, buyers began to
take control, witnessed by a pullback to and show of support around the 61.8%
retracement (highlighted in blue).

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At that point, buyers take-over and force a bullish breakout at the same 76.4% retracement
that had previously held the highs (indicated by the green box). And after the breakout
takes place, buyers continue to drive as a fresh short-term bullish trend has formed.

GBP/USD Eight-Hour Price Chart

Fibonacci Support/Resistance: To Break or Not to Break, that is the Question

For traders implementing strategy across markets, there are two primary ways of going
about it. Traders can look for directional moves or they can look for mean reversion. With a
trend trading strategy, traders are looking to harness the prevailing bias in looking for
some element of continuation. Range traders, on the other hand, are looking to take the
other side of the matter, looking to get short after a bullish move finds resistance or, on the
opposing side, looking to get long after a bearish move brings in a level of support.
The transitory state between a range and a fresh trend is the breakout; when prices push
out of the range and go into what could be a fresh trend that might continue. As such,
speculating for breakouts can be dangerous because, by nature, the trader is expecting
something different to happen as opposed to the status quo.
So key for such approaches are strong risk and trade management, along with an
analytical framework that can produce support or resistance levels that can allow for the
strategy to be properly implemented. Fibonacci can certainly help in that regards.

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FIBONACCI BREAKOUTS: SUMMARY
Range breakouts can be complex to identify and analyze but implementing Fibonacci
retracements can give traders a clearer picture of where support and resistance
zones exist. In conjunction with other technical tools, traders can make educated trade
decisions on Fibonacci breakout strategies.

Key steps to consider when employing a Fibonacci breakout strategy:

1. Correctly draw Fibonacci retracement using appropriate high/low and vice versa

2. Identify the preceding trend

3. Apply multiple time frame analysis with additional Fibonacci retracements

4. Locate range

5. Assess current market conditions

6. Look for possible breakout opportunities when price breaks above/below

resistance/support in line with preceding trend

7. Employ sound risk management

Fibonacci Trading, Analysis on Long-Term Charts

Oct 21, 2020 6:33 PM +02:00Warren Venketas, Analyst

APPLYING FIBONACCI RETRACEMENTS TO LONG-TERM CHARTS

Traders often stick with time frames associated with their respective strategies. For
example, short-term traders often solely analyze short-term time frames. But, as discussed
in our article on Fibonacci and multiple time frame analysis, traders can get greater
perspective by looking at the bigger picture, employing multiple chart time frames to
conduct their analysis. Fibonacci retracements applied to multiple time frames can help to
provide an added perspective to a trader’s analysis.

TALKING POINTS:
• Benefits of using the Fibonacci on Long-Term Charts

• How to apply the Fibonacci to a Long-Term Chart

• Fibonacci on Long-Term Charts: Summary

23
BENEFITS OF USING THE FIBONACCI ON LONG-TERM CHARTS
Utilizing a long-term chart for an initial set of Fibonacci levels allows traders to find key
levels as per the Fibonacci sequence; and this may hold value on even shorter-term charts
or in shorter-term strategies. This can be true for any time frame but the value behind
starting on a long-term chart points to the statistical significance of larger sample sizes
taken over a more robust data set that can only be offered by time.
Key levels indicated by the Fibonacci tool on the long-term chart can give short-term
traders highly important levels that would have not been identified using only a short-term
time frame. Once established, these key horizontal levels will serve as support and
resistance zones to regardless of trading style.
Visit the DailyFX Educational Center to enhance your trading knowledge

HOW TO APPLY THE FIBONACCI TO A LONG-TERM CHART

The US Dollar Index (DXY) example below illustrates how long-term Fibonacci
retracements can be implemented to work with shorter time frames. Below, a major move
was identified, taking the low from 2011 and drawn up to the high in January of 2017. At
the time of this writing, neither the high nor low has been traded through, retaining the
viability of continuing to use the Fibonacci retracement derived from this major move. The
Fibonacci retracement has simply been applied by drawing from the start of the move to
the finish, applied on the monthly chart shown below.
US Dollar Index (DXY) monthly chart (2009-2020):

Chart prepared by  James Stanley; USD, DXY on TradingView

Right off the bat, you’ll probably notice a couple of very obvious inflections at 50% and
38.2% retracement levels. And to be sure, such an observation can be of value to the
trader. But these instances are more pertinent to the application of Fibonacci in trending
markets. Just, in this case, we’re looking at a very long-term trend. On the below chart, a
number of key inflections, taken from the weekly chart, are highlighted.

24
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Dollar Index (DXY)weekly chart (2015-2020):

Chart prepared by  James Stanley; USD, DXY on Tradingview

On the above chart, notice how the inflections marked by blue or red boxes led to moves
that lasted for weeks and, in some cases, months later. The first major inflection, in early
2018 after that major move had completed, marked a full trend change as a previously
threatening bullish trend was largely erased in the two years after that 50% marker was
tested.
The 23.6% retracement soon became resistance, shown by a red box above; and that
inflection helped to reverse a trend that had just jumped up to a fresh yearly high. That
reversal lasted a little over a month until, eventually, buyers stepped back in to eventually
drive prices back-above that level; after which the 23.6% marker was incorporated as
support.
That same level was re-engaged with less than two years later, as USD was dropping
following the March 2020 spike; and this was a mere speed bump as sellers continued to
push until, eventually, the 38.2% retracement came into the picture.
For the trader merely following the weekly chart, or with shorter time frames – they may
not have even knew that this move nor these levels existed. But to the trader harnessing
the potential of longer-term charts into their analysis, with tools such as Fibonacci
retracements, that perspective could’ve allowed for some very interesting data points that
could be incorporated into strategy.

25
FIBONACCION LONG-TERM CHARTS: SUMMARY
The strategy applied above purely conveys a simplistic approach to Fibonacci execution
on long-term charts. Differing time frames may be used on different markets. There are no
concrete guidelines to how this should be implemented. The takeaway from this strategy
is the importance of using the bigger picture to generate a more complete view. This is
merely one method that can be used as part of a larger strategy in conjunction with other
technical indicators or price action techniques.
If you would like to try drawing Fibonacci retracements, this tool is available on IG’s
platforms, and can be accessed with a demo account. To sign up for a demo account with
IG Group, please click here.

Fibonacci Scalping on Short-Term Charts

Oct 21, 2020 6:40 PM +02:00Tammy Da Costa, Analyst

SCALPING WITH FIBONACCI LEVELS ON SHORT-TERM TRENDS

For Forex traders who have chosen day trading and scalping as their preferred trading
style, the correct timing of trade execution is crucial since profits are based off of short-
term market movements. The Fibonacci retracement is a popular technical
indicator commonly used for the identification of support and resistance levels while also
assisting with matters of trend continuation.
This article will discuss how Fibonacci levels can be incorporated into a short-term
approach by day-traders or scalpers.

FIBONACCI DAY TRADING

Forex day traders often rely on short-term charts when looking for opportunities in the
market, and in some cases even ignoring the longer-term perspective. While a short-term
chart may be valuable for determining immediate fluctuations, the application of Fibonacci
retracements using multiple-time frames may increase the efficiency of analysis, with
long-term charts providing key levels of support and resistance levels that can similarly be
relevant on shorter time frames; and short-term charts providing potential entry and exit
signals based off of momentum or price action.
In the example below, the EUR/USD four-hour chart highlights a Fibonacci retracement
drawn on a recent major move. And while most scalpers or day traders will be focusing on
even shorter-term charts, as we covered in the Fibonacci on multiple time frames article,
generating this analysis from a ‘bigger picture,’ longer-term chart can present value on
shorter-term offerings.
EUR/USD Four-Hour Chart

26
With the Fibonacci retracement applied, the trader can see how the retracement levels
from the move provided key inflections of support and resistance for the pair, highlighting
a number of turns as price action engaged with these key points on the chart.

Once the key levels have been defined, a shorter time frame may then be used when
seeking entry/exit signals.
FOREX FIBONACCI SCALPING
While longer time frames can help to smooth out the effect of short-term fluctuations,
providing a clearer perspective of overall market conditions, the day trader or scalper does
not usually intend on holding positions for long periods of time. So now that support and
resistance levels have been identified from the 4-hour chart, day traders can move down to
a shorter-term chart to plot execution potential.
On the below 30-minute chart, a number of inflections have been identified with either blue
or red boxes. For the scalper – who may be using an even shorter-term chart for execution
– these inflections produce trend changes or reversals that can allow for the on-boarding
of positions. Fibonacci levels can be perhaps even more powerful when meshed with
another support/resistance mechanism, such as a trendline; as this can offer an element
of confluent, giving buyers multiple reasons to re-enter the equation and thereby further
helping to substantiate the move.
EUR/USD 30-minute Chart

27
For FX scalpers, these inflections can open the door to key setups or opportunities. For
actual execution, short-term traders can also incorporate chart formations, or price action,
to further investigate which inflections may be opportunistic and which they may want to
be cautious around.
Although short-term traders may be constantly watching the chart, it doesn’t mean
that risk management should be avoided, in fact the number one mistake made by
traders is poor risk management. In periods of high volatility, the possibility of large market
gaps increases and may be detrimental to a trader’s portfolio. Although technical
analysis can be used as a guide for price action, providing potential signals, risk
management should still be carefully practiced at all times; because at no point is the
future anything but an uncertainty, and tools like Fibonacci can merely help traders to
further define the backdrop in the effort of employing strategy.
For scalpers, the cost of poor risk or trade management may be even amplified, given that
scalpers will often look to place more trades with a higher frequency; thereby creating
additional exposure over the larger sample sizes. Faults in an approach have a tendency to
be magnified under greater numbers or examples; so while analysis is certainly important
to scalpers and long-term traders alike, there may be even more motivation for short-term
traders to ensure of a proper risk management plan.
If you would like to try drawing Fibonacci retracements, this tool is available on IG’s
platforms, and can be accessed with a demo account. To sign up for a demo account with
IG Group, please click here.

Fibonacci Confluence on FX Pairs

Nov 6, 2020 5:23 PM +01:00James Stanley, Senior Strategist

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Talking Points:
- As looked at earlier in this module,  Fibonacci retracements can help traders to identify
possible support/resistance.
- We’ve previously discussed how a trader can use Fibonacci retracements on long-term-
charts, and by focusing on multiple major moves traders may be able to glean confluent
areas of support/resistance. This can provide multiple reasons for buyers or sellers to
defend these key spots on the chart, keeping the door open for reversals or retracements.
Fibonacci is wrapped in mystique, and this makes the story around it that much more
interesting. But for applicability in markets, the simple version is that Fibonacci
retracement levels offer potential areas for support and/or resistance to develop; and
because market participants may use these levels in their analysis and, in turn, because
these prices have potential impact for price behavior, this can be an excellent addition to
the FX traders repertoire of support and resistance analysis.

Origins
Italian mathematician Leonardo Fibonacci is credited with finding the Fibonacci sequence
in the 13th century, hence the name ‘Fibonacci’. And while his book Liber Abaci  introduced
the Fibonacci sequence to the western world, traces can actually be found going back as
far as 200 BC in Indian mathematics. The sequence is fairly simple: Two numbers added
together produce the next value. So 1+1 = 2, and then 1+2 = 3, and then 2+3 = 5, 5+3 = 8,
and so on. The first 22 values of the Fibonacci sequence are printed below:
1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987, 1597, 2584, 4181, 6765, 10946,
17711
This starts to get interesting once we look at the numbers relationship within the sequence
to each other. If we take a value and divide by the preceding value, we will get a number
approximately close to 161.8%. So, each number in the sequence is 161.8% greater than
the prior value after we get out of the initial portion of the sequence (after the value of 89).
This is the Golden Ratio of 161.8%.
17711/10946 = 1.61803
10946/6765 = 1.61803
6765/4181 = 1.61803
What struck Fibonacci almost a thousand years ago and the same thing that amazed a
thousand years before that is how widely this ratio, and this sequence can be found in the
world around us. In Liber Abaci, Fibonacci used the mating cycle of rabbits as an example,
showing how rabbit populations in isolation would grow according to the numerical
sequence of 1, 1, 2, 3, 5, 8, 13, etc. But this is just the tip of the iceberg, the number of
flower petals will often follow the sequence: Lilies have three petals while buttercups have
five, chicory’s have 21 and daisies have 34. Each petal is placed at .618 per turn in order to

29
allow for maximum sunlight. Tree branches, in the way that trunks split and in the way that
branches will grow, display the Fibonacci sequence. Shells, hurricanes – even human faces
adhere to the Golden ratio in a geometric spiral pattern.
Right now, you can look down at your right arm to notice that you probably
have eight fingers, five on each hand, three bones in each finger,two bones in
each one thumb and one thumb on each hand. Oh – and the ratio between your forearm
and hand – that probably applies by the Golden ratio, as well.

Applicability to Markets
While the application of Fibonacci in nature keeps many graduate level mathematics
students busy, traders have more pressing concerns: Applying the study to financial
markets. In its most common form, Fibonacci is the use of the golden ratio in support and
resistance analysis. So, plot a significant move, draw a line at 61.8% of that move, and we
have an area to watch for a possible retracement to find support. The reciprocal of .618
is .382, so this gives us another value to work with at the 38.2% level.
On the chart below, we’re looking at the lifetime move in EUR/USD, taking the low in the
year 2000 up to the high in 2009. We start at the beginning of the move and draw the
retracement to the top, and 38.2% of the way-down we can see the retracement at 1.3056.
We can also see the 61.8% retracement of this move at 1.1212. Notice how this level
helped to set resistance in the pair for 15 out of 30 months after the level came into play in
January of 2015. As EUR/USD was dropping like a rock in anticipation of ECB QE coming
online in a few short months, we caught support at this level on the way down in January
of 2015; but after that we had eight consecutive months of resistance showing at or
around this key 61.8% retracement level.
EUR/USD Monthly: 15 of 30 Months with Resistance at 61.8% Retracement, 3 Months of
Support

30
Chart prepared by  James Stanley with TradingView Charts
The past few months have been quite the wild ride for EUR/USD. After a rather threatening
drop around the U.S. Presidential Election leading into the start of 2017 (shown in red
below), the pair put in an aggressive reversal as bulls have run amok. But – when prices
were in the process reversing from the prior bearish mode into a more bullish state, the
38.2% retracement of the post-Election move showed up as a bit of support (shown in
green) before the 61.8% retracement provided a bit of resistance (indicated with purple).
After prices broke above those highs and ran with reckless abandon, resistance has begun
to show at the 161.8% extension of that move (orange box).

EUR/USD Daily: Fib Applied to recent move in EUR/USD, 161.8 Extension Providing
Resistance

Chart prepared by  James Stanley with  Tradingview charts

Taking it a Step Further

Levels found at 61.8 and 38.2% retracements can be valuable for traders, and this can be
seen on major moves of all stripes and flavors. This can be applied on short-term charts
just like long-term charts, but as is usually the case in technical analysis, longer-term
studies will have a tendency to be a bit more consistent given the larger number of
opinions over the greater evaluation period.
But we can go a step further with Fibonacci analysis. Earlier, we shared that .382 is the
reciprocal of .618, and this is true – but this isn’t the only relevance behind .382. If we take
any number in the sequence after the initial set of values, and divide it by the value two
places further in the sequence – we will have .382 or 38.2%.
13/34 = .382

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21/55 = .3818 – rounded up to .382
34/89 = .382
55/144 = .3819
But we can go even a step further by dividing a value in the sequence by the value three
places later to consistently arrive at a value of 23.6.
13/55 = .2363
21/89 = .2359
34/144 = .2361
55/233 = .2361
This gives us another retracement value to work with of 23.6%. So, now we have the 23.6,
38.2 and 61.8% retracement levels to apply in the effort of finding support and/or
resistance.
We’re not done yet: We can still take this a step further. With 23.6, 38.2 and 61.8%
retracement levels, the study will be rather uneven with two values in one half of the
retracement and only one in the latter half. This has elicited creativity across market
participants, as many will simply take the reciprocal of 23.6 and apply that as a level, as
well. This would be the 76.4% retracement, which doesn’t have any actual Fibonacci
relevance behind it. But – at .786 we have an interesting number to work with, as this is the
square root of .618, and can be a potentially more attractive stand-in to .764.
This now gives us four values across the chart, and out of practice, many traders will apply
a mid-line at 50% which, again, has no actual Fibonacci value; but that observation is far
less important to traders than the fact that other traders and analysts have it on their chart
and, hence, may respond to it.
This now gives us five values to work with when applying Fibonacci retracements to
trading analysis: 23.6, 38.2, 50, 61.8 and 78.6 (or 76.4).

Putting it All Together

As previously noted, the purpose of this analysis is not to show us what will definitely
happen in the future. No form of analysis can bring that, whether it’s based on Fibonacci,
Astrology or Psychological levels. The value in support and resistance identification is in
the ability to manage risks with trading setups. If prices are trending higher, fantastic, then
look to buy support so that if the up-trend does break-down, you can get out at a minimum
of a loss, all in the effort of mitigating the damage when markets inevitably turn-around.
But if that up-trend does continue, bingo, you’re in a great spot to manage a winning
position.
The key to applying Fibonacci retracements is to find a workable major move, and then to
allow price action to be the guide in how each level should be approached. On the daily
chart of AUD/USD below, we’re looking at a Fibonacci retracement applied to a previous

32
bearish move. The 2015 high drawn down to the 2016 low is shown in orange below, and
we’ve used red and blue boxes to highlight a few of the more prominent instances of
resistance or support to have developed off of these intervals.

Chart prepared by  James Stanley with  Tradingview charts

Notice that while the above chart is far from perfect in the fact that it did not catch every
point of support or resistance, it did show quite a few. As we discussed in our last article,
the prospect of confluence can incorporate levels from different styles of analysis, such as
psychological whole numbers.
On the below chart of AUD/USD, we took the same Fibonacci retracement above and
added in levels for the psychological levels at .7000, .7500 and .8000, along with a price
action swing indicated with a green box. Notice, that while we don’t catch every top or
bottom, we catch quite a few of them with these very simple forms of analysis. And that
resistance that held in the pair around the 61.8% retracement, that level is confluent with
the .7750 psychological level, and this is likely why that level was so difficult for bulls to
break through.
AUD/USD Daily: Confluence of Support and Resistance

33
Chart prepared by  James Stanley with  Tradingview charts
With this system of support and resistance in the analytical quiver of traders, price
action can be utilized to figure out how to trade with each of these potential support or
resistance inflections based on the context of that market’s condition at a specific point in
time.

Fibonacci for a Multi-Market Trader’s Approach

Nov 6, 2020 5:35 PM +01:00James Stanley, Senior Strategist

FIBONACCI TALKING POINTS:

- Fibonacci retracements can be applied to a variety of markets in the effort of identifying
possible support or resistance levels.
- In this article, we look at how traders that follow multiple asset classes can apply
Fibonacci analysis to their charts, building on the previous article in which we
investigated the topic of confluence with Fibonacci retracements.

The field of market analytics is full of indicators and strategies with a plethora of ways to
find out what to trade and how to do it. As a trader will often find very early, this is more of
a study of probability than it is prediction; as analysis is largely relegated to analyzing the
past to get the clearest picture of the present. Sure, sometimes those trends that have
happened in the past will continue in a manner similar to which they’ve come-in already,
allowing the trader to glean a bias that could be usable for their strategies. But, by and
large, the primary benefit of analysis, particularly technical analysis, is as a risk
management tool.
This is something investigated in the DailyFX Traits of Successful Traders research. In the
study, it becomes clear that ‘out-guessing’ the market on a constant and continuous basis
isn’t always a recipe for success, as sub-optimal risk management could eliminate the
benefit of a slightly favorable winning percentage.If you’d like access to that research, the
box below will allow for that.

This is where support and resistance can come into play. Support and resistance can help
as a risk management mechanism because it provides framework with which the trader
can implement their strategy. Let’s say, for instance, a trader is bullish on EUR/USD but is
struggling with timing the trade or managing their risk. Rather than just chase the move
higher, as driven by FOMO (Fear of Missing Out), the trader can simply wait for some
element of support to show up, at which point bullish positions can be investigated. The
trader can then implement an if-then statement: If the market remains bullish and if the

34
pair is going to continue to build with bullish structure, then this support should hold and
I’ll be able to stay in the trade. Else, the trade can be exited with the goal of loss mitigation,
and the trader can simply look to get long at a more favorable price later.

HOW TO IDENTIFY SUPPORT AND RESISTANCE USING FIBONACCI

There are a plethora of ways to find support and resistance, and the mechanism for finding
levels can range from extremely simple to incredibly ornate. One of the seemingly more
advanced methods is actually very simple to use, and this is rooted in the Fibonacci
sequence of numbers. That sequence, or at least part of it, is as follows: 1, 1, 2, 3, 5, 8, 13,
21, 34, 55, 89, 144, 233, 377, 610, 987, 1597….
The next number in the sequence can be found by adding the previous two numbers, and
this goes on for infinity. What’s interesting about the sequence are the mathematical
relationships within. Each number is 1.618 times the prior number’s value. This is called
‘Phi,’ or commonly known as The Golden Ratio, and this can be found throughout the world
in front of us: In architecture or art, or even in nature with the ratio of spirals in a pine cone
or the breeding cycle of rabbits.
To traders, the importance of Fibonacci deals with the mathematical relationship within
the sequence. Each number in the sequence (after the initial portion) is 61.8% of the next
number's value. So, 34 divided by 55 is .618, and 55/89 is the same .618. This relationship
will hold true into infinity, and this is a key variable in Fibonacci studies on traders’ charts.
This will often be plotted as a 61.8% retracement of a major move.
Taking this a step further, each number in the sequence divided by two numbers later is
38.2%. So, 34 divided by 89 is .382, and 89 divided by 233 is the same.
This will also be plotted within a Fibonacci retracement study, and this will show at 38.2%
of the analyzed move.
The 23.6% retracement comes from taking any number in the sequence, and dividing it by
the number three places to its right. So 34 divided by 144 is .236 and 55 divided by 233 is
the same. Again, this relationship will hold into infinity, and this gives us another
retracement level that we can add to our charts.
Collectively, this produces potential support/resistance levels based on the prior major
move, and those intervals show at 23.6%, 38.2% and 61.8%, as shown below.
GBP/USD WEEKLY CHART: FIBONACCI APPLIED TO ‘BREXIT MOVE’ (IN RED)

35
Chart prepared by  James Stanley with Tradingview Charts

TAKING IT A STEP FURTHER

If you’ve seen Fibonacci applied to a trading chart, you’ve probably seen a couple of
additional levels, and these are a bit more subjective as they’re not ‘true’ Fibonacci levels.
The mid-way marker, or the 50% ‘retracement’ is often a fixture on the chart. It has no
Fibonacci value whatsoever, and merely marks the midpoint of the analyzed move.
Another common level that does carry some value is 78.6. Adding this level to the
Fibonacci retracement provides a sense of balance as there are two levels above and two
levels below the 50% marker. The value of .786 does have some Fibonacci bearing, as this
is the square root of .618; and the 78.6% retracement will often be looked at for ‘deep’
retracements or potential reversal plays.

HOW TO TRADE FIBONACCI SUPPORT AND RESISTANCE

Fibonacci retracement levels can be utilized as any other potential support or resistance
mechanism: As mere potential until it begins to come into play, at which point it offers the
opportunity for a trader to implement an if-then statement. If support holds, then this trade
could work out nicely. If support doesn’t hold, get out quickly and look for greener pastures
elsewhere.
Making matters more interesting is the subjective nature with which Fibonacci
retracements can be applied. Traders can choose long-term major moves in order to look
for levels of interest for bigger-picture strategy or even intra-day levels for trading swings.
Or, Fibonacci can be applied to shorter-term charts in the effort of finding levels to base
shorter-term themes and setups from.
The starting point for applying a Fibonacci retracement is to find a major move of note,
and then to apply the indicator from the starting point of the move to the finish. Below is a
Fibonacci retracement applied to GBP/USD, and focusing on the major move that was
produced around Brexit. This takes the June 2016 high of 1.5006 down to the October low

36
from the same year at 1.1950. Notice the horizontal lines drawn at specific intervals of
23.6, 38.2, 50, 61.8 and 78.6: These are each Fibonacci retracement levels with which
traders can look to for support and/or resistance as prices continue to gyrate.

GBP/USD WEEKLY PRICE CHART

Chart prepared by  James Stanley with Tradingview charts

As can be seen from the above chart, the retracement levels produced by this major move
continue to carry weight more than two years after the move actually came-in. Today’s
short-term support is coming in at the same 38.2% retracement level of 1.3117 that’s been
in play for the past few weeks; and this comes after a rather aggressive bullish reversal
built-in off of support at the 23.6% marker in mid-August of this year.
Drawing back to the month of April, there was a far different tonality in the Pound, and this
is when the 78.6% retracement of that same Fibonacci study helped to mark the yearly
high in the pair around 1.4350. This actually occurred two separate times earlier in the
year, as this resistance helped to mark a double-top formation before the big reversal
began to show.
But even before that top was in-place, when GBP/USD spent much of 2017 recovering
from the Brexit-driven sell-off of 2016, that up-trend gyrated within that Fibonacci
structure: Resistance at the 23.6 followed by support at prior resistance. A similar instance
took place at the 38.2% retracement, as well as the 50% mid-point of the major move.
GBP/USD DAILY PRICE CHART: FOCUS ON 2017 BULLISH MOVE IN GBP/USD

37
Chart prepared by  James Stanley with Tradingview charts
APPLICATION IN EQUITIES
Fibonacci retracements can also be utilized across equity indices on both short and long-
term basis. The earlier-year correction that took place in US equities helped to mark a
38.2% retracement in the Dow Jones Industrial Average, taking the low from the night of
the 2016 Presidential election up to the January, 2018 high.
DOW JONES DAILY PRICE CHART: EARLIER-YEAR CORRECTION MARKED BY 38.2%
RETRACEMENT OF POST-ELECTION RUN

Chart prepared by  James Stanley with Tradingview charts

And on a shorter-term basis, the recent sell-off in US stocks marked a 61.8% retracement
of the prior bullish trend from Q3, and there have been follow-through instances of short-
term intra-day support and resistance at the 50% and 38.2% markers.
DOW JONES FOUR-HOUR PRICE CHART: RETRACEMENT FROM Q3 TREND HELPS TO
SET CONTEXT

38
Chart prepared by  James Stanley with Tradingview charts

39