Forex traders uses Fibonacci to pin point where to place for the market entry taking profits at a stop loss orders. Fibonacci levels are used to identify and trade off of support and resistance levels.
Fibonacci is one of the most famous names in mathematics. This would come as a surprise to Leonardo Pisano, the mathematician who is famously know by that name. And he might have been equally surprised that he has been immortalized in the famous sequence - O, 1, 1, 2, 3, 5, 8, 13, (adding the previous two numbers together will give you the next in the sequence) - rather than for what is considered his far greater mathematical achievement - helping to popularize the modern number system in the Latin speaking world.
The Fibonacci number sequence is what constructs sacred geometrical patterns. Everything in the universe is constructed in a spiral fashion. Fibonacci sequences are what construct nature and even the genetic and physical make up of the human body. If you take a pair of next-door Fibonacci numbers and divide the larger by the smaller, you get an approximation to a number called the
golden ratio (1.618). For example: 13 divided by 8 =1.625, 21 divided by 13 = 1.615.
Alongside the geometrical patterns in nature and the relation to this numerical sequence within the human organism, it can also be applied into the markets and utilized in order to find high probability trading setups on a multitude of timeframes.
The Fibonacci Levels which you should focus on primarily are:
Retracement level: 61.8% Golden Number pullback bounce.
Retracement level: 78 .6% - Stop-loss level to be placed - 10 PIPs
Extension levels: -61.8% + -27% - Target area for trend continuation.