A technical analysis tool that is basically based on Fibonacci numbers, such as Fib Circles, Fib Retracement, and Fib Extension. You may have seen the Fib Fix in our previous posts. If you haven’t read it, I suggest you take a look before continuing with this post!
As you know, we use the Fib Retracement and Fib Extension drawing tools to find potential resistance and support levels. But these drawing tools can only be used to make an asset important.it shows where to find the regions, it cannot give information about when to find it. The Fib Circle Fibonacci levels add an important element of time to our analysis. Thus, we can more easily predict when the price will react to a particular support or resistance level in the future and plan our trades accordingly. Another difference is that unlike the Fib Retracement and Extension tools, the Circle shows both support and resistance levels at the same time.
The Fib Circle is created by drawing a trendline between two points. A little tip: For the trendline to slope up to 45 degrees and the circles to be perfectly round, you need to hold down the Shift key while drawing. Circles are drawn according to Fibonacci ratios. When you click on the drawing tool, 23.6%, 38.2%, 61.8% and 100% ratios appear as default ratios. You can make changes according to your own preferences.
If we draw a horizontal line passing through the center of the circle with our eyes, we will divide the circle into two parts, the upper and lower sides. As you can imagine, the upper part of the circles are the resistance levels and the lower part of the circles are the support levels. Let’s look at examples.
We hope you understand the logic of this drawing tool a little more deeply, and we look forward to seeing how you use it in the ideas you post.
Thank you for reading!
Best regards, NewsOfFinance Team 💖