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How to Use Fibonacci for Intraday FOREX Trading

Fibonacci numbers are used to predict changes in stock market prices. If you examine a chart of currency prices such as the US dollar versus the Japanese yen, Fibonacci numbers can be overlaid to see where support for a given price exists. This will help you determine if you should buy of sell the currency. If Fibonnaci support exists just below the current price, its probably a good time to buy. Conversely, if a resistance line is just above the current price, its a good time to sell. Fibonacci overlay tools are supplied by your foreign exchange trading company, such as forex.com.

Things You'll Need

  • Forex trading account
  • Fibonacci tools
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Instructions

  1. Using Fibonacci Tools

    • 1

      Log into your forex account and chart the currencies you are examining. Typically this will be two currencies; the US dollar versus the Japanese yen, for example.

    • 2

      Overlay Fibonacci numbers. This will be a menu option on the screen or within the chart.

    • 3

      Examine support and resistance lines. A price just below a resistance line means it probably won't go up, although trading currency is risky and just like with stocks, it could break through the resistance line. Similarly, a price just above a support line probably indicates it will go up.

    • 4

      Trade if Fibonnaci bands indicate support or resistance. If the price of the yen relative to US dollar is just above a support line, it is probably a good time to execute a buy order. If it is just below a resistance line, it is probably a good time to execute a sell order.

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