The difference between the purchase price (ask) and the selling price (bid) of currency pairs / parities (the ratio of currencies) is called spread. The difference between buy-sell prices is measured in pips. Pip is the change on a piece of paper, and most parts represent the 4th step change (1 pip = 0,0001).
Forex spread ratios are not fixed because they are based on prices given by large banks and may decrease or increase according to market conditions.
The only variable in the analysis methods mentioned above is not the price. The time variable should also be examined extensively. In this context, Fibonacci Sequences can be used in price changes as well as in time intervals. When time intervals are set, the figures in the Fibonacci Series are bases in days, that is, they are divided into trend day intervals of 1-1-2-3-5-8-13-21-34. This analysis is used to determine the duration of the fluctuations.
Why is Fibonacci Series called Fibonacci Series?
The Fibonacci series was found by Leonardo Fibonacci. Leonardo Fibonacci, born in Italy, discovers these numbers when he searches for a problem and decides to give his name.
Why is Fibonacci Series so Important?
Fibonacci Series As we have mentioned in the title, the numbers
in the series are divided by the number of the previous number and the number of the gold is approached within the objects of
our lives and these numbers are important a nd mysterious. The golden ratio found in the Fibonacci Series is found in ancient Egyptians. The Greeks, like the Egyptians, used this number in architecture. To put it simply,
The geometric orbital between the parts that make up the whole.
If we try to explain Fibonacci Sequence with examples from our daily life,
The ratio of our index finger to the previous node is the golden ratio.
The rate of gold we can reach with the Fibonacci series also arises from the proportion of sensory organs in the human face.
For example, the area of our ears, from under the nose to the jaw, contains the golden ratio.
In Egyptian pyramids, the ratio of the base to the height gives the golden ratio.
USE OF FIBONACCIR DESIGN IN THE FINANCE SECTOR
FIBONACCI CORRECTION LEVELS (RETRACEMENT)
E.G / Let’s consider a parity that has seen the lowest price of 1.0520 and the highest price of 1.1376 on the basis of time.
When we subtract the high price from the low price, 1,1376 – 1,0520 = 0,0856. If we hit this value with 1.272 above, it will be 0.0856 * 0.232 = 0.0198. When we add this value to the high price of 1.1376, it will be 1.1578. This emerging value reveals the trend we expect to see the parity rise.
As can be seen from this example, it can not be expected that the movement of a parity in the financial sector will be uninterrupted. The Fibonacci Series provides analyzes that can help in determining this trend.
Another use of the Fibonacci series in the financial sector is Fibonacci Time Spans.
The most active stock market indexes in terms of transaction volume in the world are Dow Jones, Nasdaq, S & P500, Ftse and Xetra Dax. In Turkey, there are more than one index under the Istanbul Stock Exchange. The types of indices / indexes that the most transactions are realized in stock exchange Istanbul; BİST 100 index, BİST 30 index and BİST Banking index.
Rectangular graph formation occurs when prices are touched by both levels for a period of time between support and resistance levels.
These levels of support and resistance can be horizontal, as well as down or up-view channels. What is important here is not that the support and resistance levels are in the form of horizontal or up / down channels; Are parallel to each other.
The formation of the rectangle starts with the price movements rising from the support level, then comes back to the support level again after reaching the level of resistance and then completes by making a movement towards the resistance level again.
The entry point to the position is determined according to which side of the price will break after the completion of the fourth movement. The target price level is the distance between the support-resistance levels that form the rectangle, up or down, from the fracture level.
For example; Egypt had serious pressure on the exchange rate due to the fall of the US dollar to the black market. The rise of the black stock market had serious consequences for Egypt’s domestic production and investments. For this reason, Egypt devalued its currency by 14% against the US dollar in March 2016.
After the devaluation, the Egyptian stock market showed very serious rises, but against it the black market forced the Egyptian central bank to take more precautions. On June 12, 2016, the Egyptian bank once again devalued the value of the Egyptian Pound against the US dollar.
Another example of devaluation is China. China, which is experiencing serious problems with the credit market and economic contraction in 2015, has devastated Reminbi, the local currency. China, repeating this devaluation movement several times over the course of the year, warned China that it intervened with the US on monetary policy instruments on global trade. By devaluing the countries’ currencies, trying to gain advantage in global trade and being advantageous in exports is seen as the main cause of currency wars.
Devaluation is a monetary policy tool used by countries that implement a fixed exchange rate regime or a semi-fixed exchange rate regime. Devaluation is the reduction of the value of an official currency of an country against other country currencies or against a group of currency values, or at a currency standard. Devaluation is often confused with depression and is exactly the opposite of revaluation.
Devaluation is a tool used by the government or central bank of the fixed country for the relevant currency. One of the most fundamental reasons for devaluation is that the country reduces the value of its money to compensate for trade deficit. Devaluation is to lower the value of currency and to make exports cheaper and become more advantageous in global trade competition. However, imports become more expensive, and domestic households increase demand for products from domestic producers while expecting a reduction in demand for imported products.
Devaluation seems to be a means of positive monetary policy, but there are also negative effects. Making imports more expensive can make domestic production less effective, or making exports cheaper can cause inflation by increasing demand very seriously.
The concepts of support and resistance are not just forex markets, but a concept of technical analysis that is used throughout financial markets. In general, support can be explained as the level at which prices are expected to decline. The persistence of sales in the financial market at support levels is interpreted as the response of buyers at this level. However, it should not be forgotten that in the case of breakdown of important support levels, that is, if downward support points are crossed, sales will accelerate and the support point will become a point of resistance. Breaking a support point does not mean that the support level is below the support level. We can say when a level of support is broken, clearly when it closes below this level. When we look at the historical charts in Forex markets, the first multiplier is the support level where the sales are stopped and the prices can not fall further below this level. At these price levels, the Euro dollar pair has found support, as can be seen from the levels indicated by blue in the chart below. Below you can find examples of euro usd support resistance level.