Trading Fibonacci Levels – Beginners Guide

Fibonacci levels are often used by stock traders as indications
of where support and resistance can be found These indications
give on the one hand good entry points, as price breaks out thru
a fibonacci level in the trend direction, and on the other hand,
good exit or profit taking points as price falters and reverses
against the previous fibonnaci trend
So how do you calculate and use these fabulous fibonacci levels
for your swing trading activities? The answer to the first part
of the question couldn’t be simpler Just go to http://wwwfibonnacicom, a
free site offering the latest fibonacci numbers for pretty much
any stock you care to think of Enter the symbol for the stock
(eg IBM for International Business Machines, or EBAY for the
world’s biggest auction site) into the little text box at the
top of the page Then click the ‘OK’ button, and your levels are
returned immediately, together with a small chart of the stock,
and links to historical data, and bigger charts etc
Alternatively, use the quick links at http://wwwfibonna
cicom/stocklistsasp for lists of all the US, Canadian, UK,
German, Australian and Asian stocks symbols Just click the one
you want for immediate fibbonaci levels and charts
Once you have your levels, what do you do with them? Easy Let’s
look at ADBE (Adobe Systems, a software company – http://wwwfibonnacicom/stock-trading-fibonacci-levels-f
or/ADBE/) At time of writing, the fibonacci levels for ADBE
were:- Resistance at 3763 (approx), Support at 3657, 3571
and 3485 You can tell by the fact that there is resistance at
the top at 3763 then support at 3657 that the current price is
probably somewhere between the resistance and the support below
it (ie 3657) So what you are looking for is either a
breakout UP through the resistance, or a break DOWN thru the
support Whatever it does first is a good indication of where
the stock is going
For example, if price rushes up and powers thru 3763, then it
is likely to run up quite a ways On the other hand, if it
barely manages to push thru that level, then falls back, it is
likely to sink all the way down to the first support fibonacci
level at 3657 And indeed, if it then breaks down thru THAT
level, it is likely to run all the way to the next support at
3571 (or even all the way down to 3485!!!)
Here’s another fibonacci trading example Ebay (http://wwwfibonnacicom/stock-trading-fibonacci-levels-f
or/EBAY/) at time of writing gave back 3 levels of
resistance at 4588, 4535 and 4481, plus a support level at
4415 As you can see on the chart today, having failed to
breach the fibonacci resistance level of 4588, it fell all the
way thru the resistance levels right down to the support at just
over 44 where it paused Remember that a resistance, when
breached, becomes a support when price moves in the other
direction, and vice versa That’s really all there is to it
Look for rejections at support or resistance to see price turn
around, or penetrations to confirm breakouts When a breakout or
rejection occurs, look for it to run to the next level, be it
fibonacci support or resistance Happy Holidays!

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