Fibonacci Time Zones

DEFINITION of 'Fibonacci Time Zones'

An indicator used by technical traders to identify periods in which the price of an asset will experience a significant amount of movement. This charting technique consists of a series of vertical lines that correspond to the sequence of numbers known as Fibonacci numbers (1, 2, 3, 5, 8, 13, 21, 34, etc.). Once a trader chooses a starting position (most commonly following a major move) on the chart, a vertical line is placed on every subsequent day that corresponds to the position in the Fibonacci number sequence.

Fibonacci Time Zones

BREAKING DOWN 'Fibonacci Time Zones'

Fibonacci numbers are a sequence of numbers where each successive number is the sum of the two previous numbers. For reasons unknown, these numbers play an important role in determining relative areas where the prices of financial assets experience large price moves or change direction. The four popular Fibonacci studies are arcs, fans, retracements and time zones.

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RELATED FAQS
  1. What are the alert zones in a Fibonacci retracement?

    Discover more about the Fibonacci number sequence, and specifically about the key Fibonacci retracement alert levels most ... Read Answer >>
  2. What is Fibonacci retracement, and where do the ratios that are used come from?

    Fibonacci retracement is a very popular tool among technical traders and is based on the key numbers identified by mathematician ... Read Answer >>
  3. 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 >>
  4. What are the main disadvantages of using Fibonacci Retracements for trading strategies?

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  5. Why is the Fibonacci Retracement important for traders and analysts?

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  6. How reliable is the Fibonacci retracement in predicting stock behavior?

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