How to Use Fibonacci Retracement in Forex

Fibonacci retracement lines are based on the Fibonacci Sequence and are considered a "predictive" technical indicator providing feedback on possible future exchange rate levels. There are some traders who swear by the accuracy by which Fibonacci Retracements can predict future rates, while others argue that Fibonacci numbers are more art, than science.

Given their popularity and widespread usage by technical analysts, you should at least know how to interpret Fibonacci numbers. One word of caution however, like any indicator it is wise to seek feedback from additional sources to bolster your initial analysis before basing a large trade solely on the "Fibs".

In this lesson, you will learn how to identify potential retracement levels using ratios derived from the Fibonacci Sequence. To get started, we first need to review the Fibonacci Sequence.