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Based out of Auckland, New Zealand, we bring an institutional trading experience to the retail market.

An introduction to Fibonacci patterns analysis

Autochartist classifies four different Fibonacci Patterns: ABCD, 3 Drive, 3 Point Retracement and the 3 Point Extension.

The big advantage is that the platform identifies and calculates the patterns. It may take hours to determine whether a trend taking place fits into the generally accepted Fibonacci pattern. Even after completing this task, analysts still need to determine if there are trading opportunities.

With Autochartist, these possibilities are taken care of as it attempts to spot emerging patterns so that the trader can plan ahead for possible trading opportunities. The platform’s completed patterns also help traders view an active pattern or one that may be acted upon if the trader so chooses.

The analysis of Fibonacci patterns requires a lot of patience and mathematics. But with Autochartist, the platform is able to analyze hundreds of patterns and apply the mathematics needed in determining trading alerts. This way, the trader will be given more time to evaluate trading opportunities, as well as to optimally plot his entry, trailing stop, and exit strategies. Eliminating the need for patience also helps traders cope with the emotional strain that the market and trading can cause.

Employing Fibonacci patterns for analysis also provides the trader with a neutral perspective on the market. This removes any potential for prejudice, such as from current events or economic reports. Fibonacci patterns are, to put it simply, mathematical patterns that look at the market and say “this is what it has done” and “this is what it can do based on its past history.” It's a rather easy mathematical market study with no external influences.

Another benefit of using Fibonacci patterns is how it helps a trader to track whether the market returns to a certain price range or whether it will extend. The trader will then be able to decide whether to wait for a better entry price than the current market price or whether to pay more for the chance to capture higher returns.

With the creation of price level targets through Fibonacci patterns, traders can better set reasonable price targets, letting them decide whether or not to execute a trade because the risk/reward ratio can be simply computed.

As with any trading tool, traders are strongly encouraged to explore and experiment with these Fibonacci patterns before taking risks. This helps traders determine some of the peculiarities of this type of analysis. It is critical for the trader to establish that this form of analysis is appropriate for his trading style. Some traders are convinced that a specific trading discipline is right for them after a few early successes, blinded by the profits before realizing the risks involved.

It's critical to try to figure out which Fibonacci patterns function best under certain conditions to get the most benefit from these mathematical patterns. By understanding this part of the analysis tool, traders can better understand how to make good use of the Fibonacci pattern.

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