How to Trade Forex Using Fibonacci Retracements in Singapore

Retracement levels are possibly the most widely used technical tools in Forex trading to determine where reversals are likely to occur. But for traders operating in Singapore for instance, it will play a significant role in enhancing the decision making as well as enhancing traders’ outcomes. This makes fibonacci retracements more useful as it can also show where the price might be likely to bounce back or indeed extend their run.

The use of the Fibonacci retracement tool comes from the premise that after a strong price movement, the price will retrace a particular percentage of the movement. These retracement levels are constructed out of the Fibonacci series, according to which every number is equal to the sum of two previous numbers. The levels to use when trading the forex using the Fibonacci concept include; the 23.6%, 38.2%, 50%, 61.8% as well as the 100% levels. These levels can look like potential areas where the price might either find support and thus start going up or find resistance and start going down.

Image Source: Pixabay

However, in order to apply Fibonacci retracements in the forex trading then you have to look for a major trend in the market. After you have established the beginning and the end of the trend, you can add the Fib retracement tool onto the points. If you wanted an uptrend, then you would position the tool at the lower position of the move then drag it to the upper position. In case of downtrend the tool is placed at the high level and dragged towards the low level. The Fibonacci levels will then be drawn on the chart and you will obtain potential zones for price behavior.

Many traders in Singapore then seek out these levels because they contain their price reactions. For instance, if the price has fallen to the 50% level and begins to recover, this may well signify that it is likely to trend in that price direction. On the other hand if the price could not pierce through the key Fibonacci level and starts to pull back it could be an indication of a reversal pattern. Fibonacci retracement levels combined with other technical tools, such moving averages, or candlestick formations, to back up a traders’ direction. This can help raise the likelihood of trading and limit the number of unnecessary signals to the maximum extent.

Noticeably, Fibonacci retracements are not fully reliable since particular market conditions may result in false signals. When employing Fibonacci levels trading it is necessary to adequately account for the risk factors with proper risk/reward ratios. It also means a forex broker in Singapore can assist with setting up of stop loss orders and take profit targets to manage a trader’s trades. Also, a reliable broker will provide such features as advanced charting and helpful educational materials to teach you how to use the tool of Fibonacci retracements in your trading.

Applying Fibonacci retracement to your forex trading helps you make trades in the Forex market and get an understanding of support and resistance levels. If properly understood and employed this tool can help you achieve better results and thus have a higher edge on your successes. Any good forex broker in Singapore will give you the necessary tools and guides that help incorporate the Fibonacci retracement levels to your strategy in the unpredictable world of forex trading.