__Fibonacci Retracement__

Fibonacci retracement is used to find support-resistance levels between a certain top-bottom.

When you connect a top and a bottom using Fibonacci, we will identify support or resistance levels as prices retrace levels above the Fibonacci.

The retracement levels on the Fibonacci are 23.6%, 38.2%, 50%, 61.8% and 78.6% respectively. If the price reaches 23.6%, it means that the price has gone against the previous trend push 23.6%. Ideally, however, you could use the previous highs of the trend as the target where the price is likely to bounce back. As shown below:

__Golden ratio__

The golden ratio is an important rate on the Fibonacci, defined as the price zone between 0.618 and 0.65. Very often the price drops to this level and then bounces back, which is why the golden ratio area is the point where so many traders are interested in trading.

As shown below:

Another level that is also important that often acts as support in an uptrend or resistance in a downtrend is the 0.382 level above Fibonacci.

In short, if you want to find a good entry point, then you can use the Fibonacci retracement of the last to find support resistance levels that price can find. In which the golden ratio is the area with the greatest possibility of reversal and the level of 0.382 is the second strongest area that we can consider trading.

__Fibonacci extension__

For this Fibonacci, the drawing principle is similar to Fibonacci regression, only we will drawback. For example, in the picture above, the Fibonacci regression we connect from the bottom to the top during an uptrend. So now we connect from bottom to top in a downtrend. As shown below:

As shown in the picture above you can see the price is going up, and if you use the Fibonacci regression to determine the entry point at the golden ratio or the 0.382 zones. Then you can use Fibonacci retracement to find the next resistance on this current rally.

This fibo drawing allows you to determine the next price resistance. Based on the fibo expansion in the picture above, we can see that the price breaks the 0.236 and 0.382 thresholds. However, the price was initially pushed back from 0.382 and then bounced back from 0.236. The next rejection occurred at 0.786 and the price was pushed back to the 0.236 level. The price was pushed up again.

As can be seen, the way of drawing the fibo against the current trend can help the trader identify the next resistance or support in the trend. And it could also be the target price area where you can set your profit target. The important thing lies in how you define the bottom vertex to draw the standard fibo.

In short, the gold ratio between 0.65 and 0.618 is the price level with the possibility of a short-term reversal and the level of 0.382 is the level where the price can strongly reverse.

So we can take advantage of these characteristics of fibo to find entry points and support resistance levels to set goals for our trading strategy.

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