Fibonacci retracement levelsA stock trading tool integrated into stock analysis softwareFibonacci retracements are some of the best stock market trading tools. They’re also integrated into almost every good stock analysis software.Although they look very simple and easy they’re a very powerful stock market trading tool. The pullback levels of this technical market indicator are used by traders on stock markets, on commodities markets and in Forex markets too. They help to analyze the strength of the stock market trend and also to set up possible stop loss levels or target levels for trades. Levels of this technical analysis indicator are not point on the chart where you can immediately decide what to do with a stock, i.e to enter or exit trade. This technical analysis indicator should be accompanied with another technical stock indicators that could confirm information provided by pullback levels. Only in such case trader can act with confidence in his trading decisions that are needed for his stock trading strategy. Examples of this technical analysis indicatorThis first chart shows a situation in GEF stock. After a strong uptrend move in the second half of 2007, the stock consolidates in the upper part of the whole price move.Using this technical analysis indicator stock trading tool available in AmiBroker stock analysis software, you can see that stock couldn’t move lower than about 38-40% of last uptrend move . It signals the strong interest of buyers and no interest in selling the stock. It looks that investors aren’t willing to sell this stock. Instead, every pullback to the first important retracement level is used as a buying opportunity. Resolution: This is a strong stock and is worth buying.
Since the chart doesn’t offer another hint for a target of the trade (like some old resistance levels), you can use extensions of the retracement stock market trading tool. 130% or 150% level could be seen as possible targets for a long trade.
Stock market trading tip for pullback levelsCombine Fibonacci retracement levels with another type of support and resistance. The more types in one price area, the stronger type of level it is.The ideal additional hints can be provided by moving averages and horizontal price levels of support and resistance. It is also good to check candlesticks that are painted on the stock chart in these levels.
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