The Truth About Fibonacci Trading

The truth about Fibonacci trading levels is that they are useful (like all trading indicators). They do not work as a standalone system of trading and they are certainly not the holy grail, but can be a very effective component of your forex trading strategy. Most good trading software packages include both Fibonacci Retracement Levels and Price Extension Levels. In order to apply Fibonacci levels to price charts, it is necessary to identify Swing Highs and Swing Lows. A Swing High is a short term high bar with at least two lower highs on both the left and right of the high bar. A Swing Low is a short term low bar with at least two higher lows on both the left and right of the low bar. 

Source: D Selzer-McKenzie