Long Pos - swing high to swing low (1 to 0) Short Pos - swing low to swing high (0 to 1)
Fibonacci retracement levels are horizontal lines that indicate where support and resistance are likely to occur.
Apart from the psychological reasons for working, the other reason they work is because it's easy for them to be programmed into an Algorithm and bots to run on them.
Fibonacci tools act as a strong confluence to an existing trading strategy and levels and can prove to be a solid confluence when used with other reasons to enter a trade.
UPTREND In a strong uptrend, the 0.382 Fibonacci level is generally held as support. If it is lost, expect a retracement to 0.618. The 0.618 is possibly the most crucial fib level to hold and in case it is lost on a candle closing basis, one can expect upward momentum to stall.
DOWNTREND
We monitor the three potential resistance levels: 0.236, 0.382 and 0.618.
After a strong downtrend, you can only start to have confidence that there might be a strong rejection from the 0.382 or the 0.618 taken from the fib levels of the most recent swing.
A potential local bottom is in once the 0.618 fib level has been claimed.
Confluence 3. another Fibu Level 4. Candles / Pattern 5. Indicators