One of the widely used Fibonacci ratios is the 0.382 ratio. As it can be easily seen on any forex chart, currency prices are continually changing and they chase an oscillatory design with peaks and valleys. The limit of the top is usually called a resistance akin while the valley is usually called a abutment.
In adjustment to acquisition the 0.382 ratio akin what you accomplish is, aboriginal; measure the size of the drop or rise over your age of absorption. Once you accept that amount you multiply this by 0.382. Any more depending on what you are looking at, a rise or a drop on the price of the particular currency couple you are trading, you will add the last amount you calculated to the total drop or subtract the amount from the total rise.
These operations will accord you the 0.382 Fibonacci ratio akin, either for a rise or a drop on the chart you are analyzing. Once you accept the amount you can then alpha planning the strategy you will chase in adjustment to accomplish a aerial probability profit from this admired advice. For the 0.382 ratio akin calculated for a recent rise in the currency couple exchange price, your calculated akin will be a highly probable abutment and for the position of a akin calculated for a recent drop of the prices your akin will be a highly probable resistance.
Alive this ahead of the marketplace and having the proper secondary indicators, will accord you a huge advantage over most forex traders, and thats something any trader would according to they could count on. Thats why Fibonacci trading is so widely accepted over the apple, and of course, why its so profitable and acknowledged.
About the author:
Adrian Pablo; Forex trader and freelance writer.
Originall posted July 1, 2012