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29.09.2019

AAKASHAYA PATRA SEVEN STAR SMART EDUCATION SERIES PART – 27 :

Fibonacci - Fibonacci
Retracement in Down Trend

As we all know that in any trend whether its Up Trend or Down Trend, there are two internal trend known as,

1 ) Primary Trend ( Main Trend - Long TermTrend)
2 ) Secondary Trend (Correction Phase)

In early postings of this blogs, I wrote in detail about the Primary Trend and Secondary Trend, in
type of trend section If any one wish to know about in detail, please refer early blogs of this series of Smart Education Series

Fibonacci Retracement is mainly use to forecast Secondary Trend, it means it help to forecast
the resistance level of the price once correction has been already started in the stock in Down Trend Here first we clear one important thing to avoid confusion that, correction phase in down trend means stock price show upward side movement in Down Trend Here we are discuss the scenario in Down Trend, when correction start in Down Trend and price is getting Upward side movement day by day

In this scenario, use Fibonacci Retracement tool,and connect swing high (Point A) to swing low (Point B) in down trend. You will find 23.6%,38.2%, 50.0%, 61.8%, 78.6% and 100.0% levels

This are the probable resistance levels of the reversal of the price in correction phase, it means
price may get resistance and fall back from any of this level In this Fibonacci Retracement, previous resistance play an important role in reversal, so if as per historical data any previous resistance available at Fibonacci Retracement level, that will be consider as a most potential zone of price reversal, and price will might fall back from that level ( A level where Previous Resistance and Fibonacci Level are match at common price level) Here one thing is important to discuss that, when we can consider that secondary trend has been started ??

The answer is, when stock price show a break out at Down Trend Line from below to above
(Primary Trend Trend Line) it will be consider as a starting of correction phase and it will go up ward side up to various Fibonacci Retracement resistance level

In this Fibonacci Retracement level 61.8% known as Golden Ratio of Fibonacci Levels, it means
prices mostly go up ward side up to that level and might fall down from that level and that price
point will be the end of the correction phase, and stock price started to fall down and match with
down trend meand loer high and lower low But once again previous historical resistance is play an important role in reversal with Fibonacci Retracement We can use also combination of Fibonacci and Pivot Points (We already discussed earlier) for more refine result of probable reversal If in secondary trend price go up ward side up to 100% level and break that level and trade above the Fibonacci 100% level that is the sign of end of the current Down Trend and Up Trend might be start from this level.
I hope this article on Fibonacci Retracement in Down Trend help you to find probalble resistance level of correction phase with the help of Fibonacci Retracement tool.

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