Welcome! Dear Traders,you are reading my forex trading experiences. Forex trading is a very profitable and very risky business opportunity. If you are a beginner, calm down,have a cup of coffee, and convince yourself that you need to study hard to win in forex trading. Obviously, the task is not easy as the statistics claim that only 5% traders win in forex trading. If you are determined, serious,and hard working, you can surely be included in the group of winners.

## Friday, January 29, 2016

### HOW TO TRADE 161.8%, 261.8% AND 361.8% FIBONACCI RETRACEMENT LEVELS, AND FIND THE STRONG SUPPORT AND RESISTANCE LEVELS

yourFXguide-"If you have the weapons, you can win in the war." Financial trading is a war, and traders need to collect as many weapons as possible. We agree weapons only cannot make you winner in the financial trading, but you also need the strategy defined and tested.

This post explains the way to use 161.8%, 261.8% and 361.8% fibonacci retracement levels in trading. We already know the common existence of golden ratio , which is 1.618, and its significance in financial trading. 2.618 and 3.618 are the two times and three times of golden ratio respectively.

161.8% fibonacci retracement levels are respected by the price as strong support or resistance levels when the retracement levels are calculated basing on a relatively big correction, in another way when the starting and ending point of fibonacci retracement tool covers a big move.

In some cases 161.8% fibonacci retracement level of small moves also counted depending on the situations e.g. at the end of an impulsive five waves pattern. We can find the price at 161.8% fibonacci retracement level using the following formula Price at C = Price at B - {(Price at A + Price at B) X 1.618}, if we want the find the fibonnaci retracement level without retracement tool.

261.8% fibonacci retracement level represents strong support or resistance level whether it is of a small move or big move. 261.8% fibonacci retracement level represents a strong support or resistance level when it follows a prior correction.

In the illustration bellow, you can see price makes a correction between the B and C price levels. If the correction is bellow the 161.8% fibonacci retracement level or little above, the 261.8% fibonacci retracement represents strong support or resistance.

We can calculate the price level at 261.8% fibonacci retracement level with this formula Price at C = Price at B + {(Price at A + Price at B) X 2.618}, without applying the fibonacci retracement tool.

361.8% fibonacci retracement level represents strong support or resistance level whether it is of a small move or big move. 361.8% fibonacci retracement level represents a strong support or resistance levels when it follows a prior correction.

In the illustration bellow, you can see price makes a correction between the B and C price levels. If the correction is little bellow the 261.8% fibonacci retracement level or little above, the 361.8% fibonacci retracement represents strong support or resistance.

We can calculate the price level at 361.8% fibonacci retracement level with this formula Price at C = Price at B + {(Price at A + Price at B) X 3.618}, without applying the fibonacci retracement tool.

Dear Traders, above techniques will dramatically improve your trading experience. Sometimes you may need to avoid the long shadow of the candlesticks, which are considered as noise, to calculate the retracement levels more accurately. These techniques also allow us to identify the potential reversals. 