Fibonacci indicator – How to trade effectively in IQ Option

Fibonacci indicator - How to trade effectively in IQ Option
Fibonacci indicator - How to trade effectively in IQ Option

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In the financial market, it can be said that Fibonacci indicator is an effective tool used by many professional traders. So what is Fibonacci? How does it work? How to use Fibonacci and trade in IQ Option? Let’s find out through this article.

What is Fibonacci indicator?

Fibonacci is a series of numbers from left to right after the first 2 numbers. The increasing value in the series of numbers that each of the following numbers is decided by the sum of the 2 consecutive previous numbers. For example:
0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377 next numbers are 610 ..

What is Fibonacci indicator?
What is Fibonacci indicator?

Fibonacci consists of 2 levels

The Fibonacci retracement levels will be 0.236, 0.382, 0.500, 0.618, 0.764.

And the Fibonacci extension levels will be 0, 0.382, 0.618, 1,000, 1,382, 1.618.

How to set up Fibonacci indicator

To set the Fibonacci sequence. (1) Click Graphical Tools => (2) Select Fibonacci Lines.

How to set up Fibonacci indicator
How to set up Fibonacci indicator

How to use Fibonacci in IQ Option

Use the Fibonacci sequence to identify support/resistance

First of all, it is necessary to identify Swing high, which is a candlestick that stands at the top of a trend with the lower tops adjacent to its left and right. On the contrary, Swing Low reversal bottom is a candlestick that has the lowest price compared to its left and right candlesticks.

Use the Fibonacci regression to draw a chart connecting Swing High to Swing low. From there, the support levels will be formed.

Use Fibonacci to identify the support level
Use Fibonacci to identify the support level

Use the Fibonacci regression to draw a chart connecting Swing Low to Swing High. From there, the resistance levels will be formed.

Use Fibonacci to identify the resistance level

Use the Fibonacci numbers to identify trends

Three Black Crows candlestick pattern appears at the top of the trend. It’s a high chance that there will be a price reversal based on the Fibonacci sequence.

Use Fibonacci to identify trends
Use Fibonacci to identify trends

IQ Option trading strategy with Fibonacci indicator

Use the Fibonacci indicator to identify resistance and support zones and combine SMA indicator to enter a safe trade. The expiration time is from 15 minutes or more.

Strategy 1: Fibonacci indicator combines with SMA indicator

If we can identify support and resistance with the Fibonacci level, when the price is near SMA, we focus on observing the price reaction to have a safe entry point.

Requirements: Japanese 5-minute candlestick chart + Fibonacci + SMA30. The expiration time is 15 minutes or more.

How to trade:

HIGHER = Uptrend + Price enters the support zone defined by Fibonacci + The price moves up and cuts SMA from below.

Fibonacci indicator combines with SMA
Fibonacci combines with SMA

LOWER = Downtrend + The price enters the resistance zone defined by Fibonacci + the price crosses SMA from above.

Fibonacci indicator combines with SMA

Strategy 2: Fibonacci indicator works with reversal candlestick patterns

You can use Fibonacci with a reversal candlestick pattern in the level zone to have a safe entry point.

Requirements: Japanese 5-minute candlestick pattern + Fibonacci. The expiration time is 15 minutes or more.

How to trade

HIGHER = Uptrend + Fibonacci + Bullish candlestick pattern (Tweezer Bottom, Morning Star, Three White Soldiers).

Fibonacci indicator works with reversal candlestick patterns

LOWER = Downtrend + Fibonacci + Bearish candlestick pattern (Evening Star, Bearish Engulfing).

Fibonacci indicator works with reversal candlestick patterns
Fibonacci works with reversal candlestick patterns

After reading this article, you can try Fibonacci indicator with Demo account in IQ option platform to experience these interesting trading strategies.

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Fibonacci indicator – How to trade effectively in IQ Option
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