Steemit Crypto Academy Contest / S14W4: Fibonacci Retracements

The Fibonacci Number System Similar to a tool in the stock market, retracements are used to determine possible levels of support and resistance. While playing a game of hopscotch, picture yourself with these unique markings on the ground that you could potentially bounce off of. It is similar to that, but with stocks instead.

Certain percentages, such as 23.6%, 38.2%, 50%, and 61.8%, are used in these retracements and are derived from a complex mathematical series known as the Fibonacci sequence. Consider it as adding various stepping stones to your game. These percentages are used by traders to predict potential "retrace" or bounce back points in the up and down movements of a stock's price. Although it's not 100% accurate, it provides an indication of possible regions where price fluctuations may occur.

These retracements are used by investors to decide whether to buy or sell equities. For example, traders may use those Fibonacci percentages to determine where a stock might go next if its price dips and then starts to rise. If it's close to a specific percentage, they might choose to purchase it because they believe it will rise from that point.

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But keep in mind that it's not magic. It's just one of the instruments used by stock market participants to predict potential future stock price movements.

• How to Calculate Fibonacci Retracement Levels?

The Fibonacci retracement levels are interesting because they originate from a unique series of numbers. Consider that you begin with the numbers 0 and 1, add on to them to get a string that is 0, 1, 1, 2, 3, and so forth. It never ends, and the percentages that result from dividing one number by the next are 61.8% and 38.2%. These are the primary levels that traders use to determine potential stops or bounces in the price of a stock.

Thus, you use this unique number sequence to find these levels rather than actually "calculating" them. They aid traders in speculating on potential future stock price movements. It is similar to having hints from this pattern in math.

The cool thing about these numbers is that they pop up everywhere! From sunflowers to galaxies, shells, ancient stuff, and even in buildings' designs, this 61.8% ratio shows up in all sorts of places. It's like nature and design have a secret code based on these numbers.

So, when folks talk about Fibonacci retracement levels, they're basically talking about using these percentages to guess where a stock might turn around. It's kind of like having a special math-based map for the stock market.

In the world of trading, there are three key Fibonacci retracement levels that stand out: the 61.8%, 38.2%, and 23.6%. These levels hold quite a bit of significance for traders. They're like checkpoints that traders keep a close eye on during their stock market journey.

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It is clear by examining the BTC to USDT trading chart that Bitcoin started off with an upward trend at $43,300. This rising trend suggested that Bitcoin was appreciating its value relative to the US dollar. But as the day went on, the price increased even more, reaching $44,100, which was the top (highest point) of the trading session. This peak represents the highest value that Bitcoin might have attained in that particular period of time and is an essential point of reference for traders.

On the other hand, within that same time frame, the price of Bitcoin also decreased, hitting a low for the day's trade. This low is the lowest price at which Bitcoin fell during that period, making it an important low point. Due to their ability to identify probable zones of price volatility and changes in market mood, these high and low points are crucial indications for traders.

These high and low levels are important to traders looking to enter or exit the market. For example, the first entry point was noticed at $43,300, which signified the start of the upward trend. Furthermore, an other possible entry point may be evaluated around $43,600, indicating a thereafter advantageous position for traders to either enter the market or contemplate taking profits.

Using the Steem to USDT trade chart, let's dissect it. The daily last 30 mins makes it clear that Steem's movement began in an upward trend at about $0.2420 and eventually broke through to reach $0.2550 by the end of the day. The low point and the peak point are two significant moments in this journey.

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These points represent possible entry or departure points for traders. It is clear from looking at the chart that the initial entry might have been made near the beginning of the uptrend, around $0.2420. It's possible that a second entry point at $0.2480 was discovered when the price increased.

These particular levels are frequently watched closely by traders because they might signal important junctures in the market movement. In this instance, depending on the movement in the cryptocurrency pair, Steem to USDT, these levels could be the indicators for traders to think about entering or closing positions.

Advantages and disadvantages of Fibonacci retracements.

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