The Italian mathematician Fibonacci was one of the most talented Western mathematicians in the Middle Ages. He is famous for introducing the Indo-Arabic numeral system to the European academic world. Today, he is well-known among professional traders because the Fibonacci sequence is widely used to predict price retracement levels and price predictions.

However, the application of Fibonacci amount series is much richer than simply drawing Fibonacci retracements and Fibonacci extension levels. If you want to really use the power of Fibonacci sequence, you should also consider using various other tools, such as Fibonacci circles, sectors and time zones.

Use circles and time factors to trade Fibonacci

You may already be familiar with drawing Fibonacci retracement levels to find potential support and pressure levels. However, these vertical lines only show us where the market may find major areas. For traditional Fibonacci retracement levels, it is impossible to predict when prices may reach these levels.

The Fibonacci circle is the best application for adding time range elements to the chart. Therefore, we can determine exactly when the price will react to a certain future support or resistance level and plan our trade accordingly.

Use circles and time factors to trade Fibonacci

Fibonacci circles show areas of support and resistance. In the figure, we have drawn the weekly trend of the euro against the dollar from the lowest point to the upper limit. This line is called the baseline of the Fibonacci circle. Technically speaking, there is no difference in the way of drawing Fibonacci circles compared to drawing regular Fibonacci retracements.

However, the main difference is that, unlike Fibonacci retracement instruments, Fibonacci circles show support and resistance.

Fibonacci fan and forecast trend line

Just like Fibonacci circles, Fibonacci fans can also provide you with support and resistance forecasts and time factors. However, the Fibonacci fan design draws a series of trend lines instead of circles.

Once you find an uptrend or downtrend, you only need to connect the lows and highs or highs or lows to draw the Fibonacci fan. Then, the Fibonacci fan tool in the charting software will create many trend lines based on the Fibonacci sequence. These trend lines may become potential support levels for downtrends and potential resistance levels for uptrends.

Fibonacci fan and forecast trend line

The Fibonacci fan can draw a fan, which can provide potential support in an uptrend.

Looking ahead, the Fibonacci fan’s trend line continues to provide potential support areas for the future. 

Fibonacci time zone and reversal zone

Most traders often ignore the power of Fibonacci time zone because it is one of the most misunderstood and underutilized technical analysis tools.

The Fibonacci time zone is indicated by the vertical line on the chart. Unlike the typical application of the Fibonacci sequence of predicting potential support and resistance levels, the vertical time zone line is only used to predict the potential areas of swing highs, lows or reversals that may occur in the future.

You can use Fibonacci time zones alone, but it is best to draw historical support and resistance levels on the chart, and then draw vertical Fibonacci time zone lines to correctly identify potential reversal points. Also, keep in mind that Fibonacci time zones are called “zones” for a reason, because you should expect development to occur “near” to these zones, rather than being completely vertical.

The Fibonacci sequence is one of the mysteries of the universe. Although there is no scientific evidence to prove why these sequences often occur in nature and in the market, empirically speaking, the technical level and price level derived from the Fibonacci sequence do have a certain correlation with this sequence.

Although learn to use the basic Fibonacci retracement levels and integrate them into your trading strategy, if you really want to use the power of Fibonacci numbers, then learn to use Fibonacci circles, Fibonacci Naci fans and Fibonacci time zones, which can provide you with the advantage you need to consistently beat the market.