# How To Trade Using Support, Resistance, And Fibonacci Retracement

If are you looking to learn about support, resistance, and Fibonacci retracement then you are at the right post. Because in this post, I am going to discuss what is support, resistance, and Fibonacci retracement. How to draw support, resistance, and Fibonacci retracement. How to trade using support, resistance, and Fibonacci retracement? and many other things.

If you read the full post then you never need to search again on google about it. I believe, if you read with full dedication you got expertise about it. But why do I give you a guarantee that after reading this post you got expertise about it? Because I have 5 years of experience in it and I teach many people and got very positive results and feedback. Let’s start.

Bonus Point: Trend is three types- uptrend, downtrend, and sideways trend. In the uptrend the price trade making higher highs and higher lows and in the downtrend the price trade making lower highs and lower lows and in the sideways trend the price trade making highs and lows.

## Concept Of Support

The concept of support is different in all trends. In an uptrend, the higher lows are the support. In the downtrend the lower lows are support. In the sideways trend, the lows are support.

There are two types of support

1. Minor Support: This is the support where the prize is only one time taken to support. as higher lows in an uptrend, lower lows in a downtrend, and lows in a sideways trend.

2. Major Support: This is the support where the prize is two or more two times taken to support. as given in the image below.

## Concept Of Resistance

The concept of resistance is the opposite to support. In an uptrend, the higher highs are the resistance. In the downtrend, the lower highs are the resistance. In a sideways trend, the highs are the resistance.

There are two types of resistance

1. Minor Resistance: This is the resistance where the prize is only one time taken resistance. as higher highs in an uptrend, lower highs in a downtrend, and highs in a sideways trend.

2. Major Resistance: This is the resistance where the prize is two or more than two times taken resistance. as given in the image below…

## How Support And Resistance Levels Reverse Their Roles

Now, we understood the concept of support and resistance but, think about that situation when the support is broken down and the resistance is broken out on that situation the sign to reverse the trend

now, we understand for example…

### Support Becoming Resistance and Vice Versa: Degree of Penetration

After the break out of resistance in a downtrend and break down of support in the uptrend. it reverses their roles the resistance act as support and the support act as resistance. Now, understand the image given above.

## Fibonacci Retracement

Fibonacci retracement is a very effective tool to identify support and resistance. It is very useful for traders/investors the buy, sell, stop loss, and target. The level of Fibonacci retracement is work most of the time. Let’s more discover about Fibonacci retracement…

### Fibonacci Numbers

Fibonacci Number is discovered by Leonardo Fibonacci. The number sequence is 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144…….., and so on to infinity. The sequence has many interesting properties, not the least of which is an almost constant relationship between the numbers.

1. The sum of any two consecutive numbers equals the next highest number. For example, 3 and 5 are equal to 8, 5, 8 equal to 13, and so on.

2. The ratio of any number to its next higher number approaches .618, after the first four numbers. For example 1/1 is 1.00, 1/2 is .50, 2/3 is .67, 3/5 is .60, 5/8 is .625, 8/13 is .615, 13/21 is .619, and so on. Did you notice that the ratio of numbers is around .618 and notice the value of 1.00, .50, and .67? We will more talk about these values in ratio analysis and percentage retracement.

3. The ratio of any number to its next lower number is approximately 1.618, or the inverse of .618. For Example, 13/8 is 1.625, 21/13 is 1.615, and 34/21 is 1.619.

4. The ratio of alternate numbers approach 2.618 or its inverse, .382. For example, 13/34 is .382, and 34/13 is 2.615.

### Fabonacci Parcentage Retracement

The most commonly used number in percentage retracement analysis is 61.8% (usually round off 62%), 38%, 50%, and 67%. The Fibonacci square refines those numbers a bit further. In a strong trend, a minimum retracement is usually around 38%. In a weaker trend, the minimum percentage of retracement is 62%.

It was pointed out earlier, that the Fibonacci ratios approach .618 only after the first four numbers. The first three ratios are 1/1(100%), 1/2(50%), and 2/3(66%), Many students of Elliot may be unaware that the famous 50% retracement is actually a Fibonacci ratio, as is the two-thirds retracement. A complete retracement(100%) of a previous bull or bear market also should mark important support and resistance area.