The Fibonacci Levels on the Olymp Trade platform is a great and complex indicator. It is used in trading the reversals of the trend. In this guide, you will get an overview of this powerful tool as well as some advice on how to use it at Olymp Trade.
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The Fibonacci levels overview
The indicator in question will be displayed on your chart in the form of a few horizontal lines. They correspond to the Fibonacci ratio 23.6%, 38.2%, 50%, 61.8% and 100%. The aim of using the Fibonacci levels is to foresee the potential price retracement zones. They will also be the points where the position can be opened and closed.
Configuring the Fibonacci levels on the Olymp Trade platform
You have to be logged in to the Olymp Trade account first. Then choose the asset and the Japanese candlesticks chart type. Now you can click on the indicators feature. Scroll down until you will get to “Drawing”. Click on “Fibonacci levels”.
If there is an uptrend you should click on the lowest price point. The second click should be on the highest price point. For the downtrend just do the opposite. First, click on the highest price point and then on the lowest. This will set the indicator up.
The Fibonacci levels in predicting the retracement of the trend
First, let me explain to you that the trend retracement is not identical to the trend reversal. The latter happens when the prices change direction. They start to move down if there was an uptrend before, or up after a downtrend. The trend retracement means that the price’s direction change only temporarily and they jump back into the previous trend once the retracement is over.
The Fibonacci lines are distributed across the chart in a way that shows the areas of the trend retracement.
Pros and Cons 👍👎
- The Fibonacci Levels is a powerful tool for predicting trend reversals. 💪
- It helps traders to identify potential price retracement zones. 🎯
- With practice, it can help traders identify effective trade entry points. 📈
- The Fibonacci Levels can be complex to understand and use effectively. 😓
- It requires constant monitoring and quick decision making. 👀
- It may not always accurately predict trend reversals or retracement zones. ⚠️
|Fibonacci Levels Feature
|Trend Reversal Prediction
|A tool to predict the reversal of trading trends.
|Price Retracement Zones
|Helps identify potential zones where price retracement can occur.
Trading with the use of the Fibonacci levels on the Olymp Trade platform
With the indicator set up, your goal is to determine the zones where the trend retrace. They will be an excellent point to enter short trades. The most commonly used lines are 0.382 and 0.618.
It is believed that high buying and selling pressure may interfere with the trend and result in price fluctuations. When the price approaches marked lines it is best to enter the trade.
Let’s take a look at the exemplary chart below. There is an uptrend on the market. I’ve set the Fibonacci levels by clicking the lowest point first, then the highest. You can clearly see that there are price levels with which the market reacts on its way down. As you know the market is not moving directionally all the time. In every trend, we can spot correction movements. Those often stop at one of the Fibonacci levels and later the trend continues.
Using the Fibonacci lines becomes easy with some practice. They can serve as an excellent way to determine the trend retracement areas and the points to enter the trade at the same time. Trade long-lasting positions to achieve the most efficient performance.
Now, go to the Olymp Trade demo account and put the knowledge into practice. Trade with the Fibonacci levels indicator and tell us how you find it.
Wish you an enjoyable trading experience!
Q&A Section 💡
- Q: What is the main use of the Fibonacci Levels indicator?
- A: Fibonacci Levels is primarily used to predict potential trend reversals and price retracement zones in trading.
- Q: Can the Fibonacci Levels indicator predict all trend reversals?
- A: While it can provide insights, the Fibonacci Levels indicator may not always accurately predict every trend reversal.
- Q: How can I use the Fibonacci Levels indicator effectively?
- A: For best results, practice using this indicator on a demo account before applying it to live trading. Also, it should always be used in conjunction with other analysis tools.
- Q: Can the Fibonacci Levels indicator give false signals?
- A: Like any other technical indicator, the Fibonacci Levels indicator may occasionally give false signals.
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