What Is the .382 Fibonacci Ratio in Forex Trading?

In a past article you could read that Fibonacci Trading is the basis of many Forex trading strategies which is used around the world by a lot of Forex traders. These strategies are all based on the Fibonacci ratios (.236, .50, .382, .618, etc.) and each of them can specialize in a particular ratio along with other indicators in order to make the pinpointing of entry and exit levels as exact as possible.


One of the mainly used Fibonacci ratios is the 0.382 ratio. As it can be easily seen on any Forex chart currency prices are continually changing and they follow an oscillatory pattern with peaks and valleys. The limit of the peak is called a resistance level while the valley is called a support.


In order to find the 0.382 ratio level what you have to do at first: scale the size of the drop or rise over your time of interest. Once you have that value you multiply this by 0.382. Now depending on what you are looking at a rise or a drop on the price of the "currency pair" you are trading you have to add the last value which you calculated to the total drop or subtract the value from the total rise.


These operations will give you the 0.382 Fibonacci ratio level either for a rise or a drop on the chart which you are analyzing. Once you have the value you can start to plan the strategy which you will follow in order to make a high probability profit from this useful information. For the 0.382 ratio level calculated for a recent rise in the "currency pair" exchange price your calculated level will be a highly probable support and for the case of a level calculated for a recent drop of the prices your level will be a highly probable resistance.


Knowing this ahead of the market and having the suitable indicators this will give you a big advantage over most Forex traders and that is something any trader would like they could count on. That is why Fibonacci trading is accepted all over the world and of course because of its profitability.