Fibonacci time zones
Lastly, in this section we will learn ‘Fibonacci Time Zones’
Fibonacci times extensions are vertical lines that represent time periods in future where the price could make its next possible high or low or the area from where the price might start to correct.
In order to plot the Fibonacci time extension numbers on our chart we need to connect the swing low to the swing high and the vertical Fibonacci extensions are plotted on the right hand side of our chart denoting the possible time in future where the price make its next swing high or swing low. It is assumed that most of the tops and bottoms are made around Fibonacci numbers. The swing low and swing high points we choose to plot Fibonacci time extensions should be of a major trend which is clearly visible.
So, what we have learned from this module is the concept of Fibonacci and its importance in technical analysis. The Fibonacci numbers are extremely useful to identify different support and resistance zone in a stock or any other financial securities. The application of the tools we have learned like Fibonacci retracements, extensions, Fibonacci Fans & arcs, etc., comes very handy for every trader in the market while doing technical analysis. Keep practicing these Fibonacci tools for your trading. Also, learn the other aspects of technical analysis from different modules of ELM School and enhance your trading skills.