Fibonacci Time Zones are used to help identify potential areas where reversals or significant changes in price may be expected to occur.
A series of vertical lines are drawn on the chart each corresponding with a Fibonacci ratio as a user defined time interval. It is set by drawing a trend line between price highs or lows. Instead of price, one can use president timeframe, economy cycle or interest cycles as time series plot. The Time Zone tool then plots a series of vertical lines at increasing intervals, based on the Fibonacci sequence. Significant price changes are seen to occur near to the vertical lines.
For example, see euro-dollar weekly chart, in which we plotted Fibonacci Time Zones from May 2014 top of 1.40 to low of March 2015 which was around 1.04. On chart in first time zone vertical line we saw some bounce back and consolidation. Then at second vertical line same can be seen. While at third vertical line we saw strong rally after testing previous low of 1.04 and high of 1.25 in December 2017. Means almost 2100 pips rally was happened in last time zone.
I think these tutorials will give you basic idea about Fibonacci trading and how to use different Fibonacci tools for proper market prediction and profit making. In upcoming posts, we will continue explore technical analysis field and different tools to perfect your trading and investing skills.