Fibonacci is one of the most used Forex and binary options trading indicators by advanced traders. Fibonacci is an excellent indicator for predicting future support and resistance levels based on Fibonacci levels. Learn how to draw and use Fibonacci extensions and retracements levels.
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Fibonacci Indicator Explained
Fibonacci indicator is used for predicting the future S/R levels by measuring the last prominent trends. Trends are measured on the chart from right to left, no matter if the asset is trending up or down. Fibonacci works best if applied in trending markets. If the market continues trending in the direction of the measured trend, the future resistance points can be expected at 127 and 161,8 Fibonacci extension levels, and if the market reverses, the most valid support levels can be found at 61,8 and 50 Fibonacci retracement levels.
Fibonacci Indicator for Binary Options
Fibonacci indicator is a very versatile tool and can be used to define most precise entry points, especially with binary options trading. It is very useful indicator that can be combined with any trading strategy. For example, if you are trading the 5 Minute Trading Strategy presented on this website it is strongly advised to implement the use of fibonacci indicator, to be able to filter out some of the bad trade entry points and define the most valid ones. Implementation of Fibonacci indicator into the existing strategy will reduce the overall number of trades, but it can highly increase the number of winning trades in long-term statistical results.
Fibonacci indicator works very well when combined with oscillators, such as Stochastic Oscillator Indicator or RSI Indicator, and many binary options trading strategies can be developed only with use of the two indicators.