Describe how to use the Fibonacci sequence to identify price support and resistance levels.
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The Fibonacci sequence is used to identify price support and resistance levels. Support levels are where the price falls and struggles to move below, while resistance levels are where the price rises and struggles to move above. The Fibonacci sequence provides levels of support and resistance that can help identify potential price reversals. To use the Fibonacci sequence to identify potential levels of support and resistance, look for Fibonacci ratios as follows: 0.236, 0.382, 0.618 and 0.764, supporting the idea that the price will find difficulty in breaking through these certain price levels.
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