Fibonacci Clusters

DEFINITION of 'Fibonacci Clusters'

A tool used in technical analysis that combines various numbers of Fibonacci retracements, all of which are drawn from different highs and lows. Fibonacci clusters are indicators which are usually found on the side of a price chart and look like a series of horizontal bars with various degrees of shading. Each retracement level that overlaps with another makes the horizontal bar on the side darker at that price level. The most significant levels of support and resistance are found where the Fibonacci cluster is the darkest.

BREAKING DOWN 'Fibonacci Clusters'

This is a useful tool to gauge the relative strength of the support or resistance of various price levels in one quick glance. Traders often pay close attention to the volume around the identified levels to confirm the strength of the support/resistance.

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RELATED FAQS
  1. What is a common strategy traders implement when using Fibonacci Clusters?

    Learn common trading strategies traders use for trading with Fibonacci clusters to be able to enter a market at a very advantageous ... Read Answer >>
  2. Why are Fibonacci Clusters important in a Fibonacci Retracement Strategy?

    Find out how Fibonacci clusters form and how they can be used by traders and analysts to identify support and resistance ... Read Answer >>
  3. How do I use Fibonacci Clusters for creating a forex trading strategy?

    Find out how traders in the forex market can implement Fibonacci cluster analysis with their currency pairs to identify areas ... Read Answer >>
  4. How reliable is the Fibonacci retracement in predicting stock behavior?

    Learn why the reliability of the Fibonacci retracement indicator is debatable, and how the indicator is used to identify ... Read Answer >>
  5. How can a swing trader use a Fibonacci retracement?

    Learn how swing traders can use Fibonacci retracements to identify areas of support and resistance, as well as entry and ... Read Answer >>
  6. What are some of the more common Fibonacci retracements?

    Examine the basic Fibonacci retracement levels, and learn how key Fibonacci levels are used by traders to identify potential ... Read Answer >>
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