Fibonacci retracements and extensions are known to be quite reliable indicators when used alone. They can often accurately predict support and resistance lines along a security’s trend and this can help determine price targets which, if used correctly, can help a trader make a big profit. However, as is the case with any indicator, the best results generally increase when a combination of indicators is used to provide more substantial evidence. Fibonacci retracements and extensions can be used in conjunction with well-known candlestick patterns and, if employed successfully, the two indicators can predict price reversals that are likely to occur if a security reaches a resistance or support line.

Commonly, traders will always use a combination of indicators to help them make decisions about when to enter and exit the market. Relying on any particular indicator can be limiting and often does not provide enough evidence to make crucial decisions. By combining indicators with a Fibonacci retracement or extension, a trader can be much safer when making a foray into the market because they will be provided with evidence from two separate sources. Using Fibonacci pullbacks and extensions in conjunction with other indicators significantly increases a trader’s chances of success because if two or more indicators suggest the same move in the market, it is likely to happen. Conversely, if one indicator suggests the market will go higher while another indicator suggests the market price will fall, this shows a trader that entering the market at this point may not be a good idea because there is a significant degree of uncertainty. Present. .

Fibonacci retracements and extensions can be used in conjunction with candlestick patterns to help provide more compelling evidence when a trader is considering entering and exiting a market. Candlestick patterns are arguably the most basic form of indicator available to a trader, but this does not make them irrelevant or a waste of time. When used correctly, certain candlestick patterns are known to be incredibly reliable and can accurately predict price reversals or trend continuations. One particular candlestick pattern that is well known for its consistency and reliability is the doji star. This occurs when the price of a security opens and closes at the same point during a specified period. As the name suggests, the candlestick resembles a star cross rather than a candlestick and when this is seen, a trader can be sure that a price reversal is likely to occur.

The doji star candlestick pattern can be used in conjunction with a Fibonacci retracement and extension to predict price reversals at significant points of support or resistance. For example, if a resistance point has been highlighted by a Fibonacci retracement, a trader should look for a doji star as price approaches resistance. This will confirm if the price is likely to bounce or if it is likely to break above the resistance and continue. If it looks like the price will recover, a trader should make a sale.

Combining Fibonacci analysis with high probability candlestick patterns is a great way to increase the accuracy of both of these valuable tools.