Traders use fibonacci level retracement to identify support or resistance level. This trading tool is a good trading tool when the market is in trending movement. But in sideways market this trading tool is not too effective. The main concept of Fibonacci lines is to find buy trading position when the market price move around support level or sell trading position when the market move around resistance level.
To find retracement level, we must practice first to find high level or low level, these level usually called as swing high and swing low. When the market price is in bullish trend, all you have to do is pull the Fibonacci retracement tool from swing low to swing high. And when the market is in bearish trend, all you have to do is pull the Fibonacci retracement tool from swing high to swing low.
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