How to Use Fibonacci Retracement on REX American Resources Corporation

Investing in the stock market requires a mix of strategy, analysis, and sometimes a little bit of art. One of the popular technical analysis tools that traders and investors use is Fibonacci retracement. It helps identify potential support and resistance levels by using key Fibonacci ratios. In this post, we’ll walk through how to apply Fibonacci retracement specifically to REX American Resources Corporation (REX), providing a free, step-by-step guide to help you incorporate this technique into your stock analysis.

What Is Fibonacci Retracement?

Fibonacci retracement is based on the Fibonacci sequence, a series of numbers where each number is the sum of the two preceding ones, often found in natural phenomena. In stock trading, certain percentages derived from this sequence — namely 23.6%, 38.2%, 50%, 61.8%, and 78.6% — are used to predict possible reversal points on a stock’s price chart.

Traders use these levels to spot where a stock price might find support during a pullback or resistance during an advance. This can be particularly helpful for timing entry and exit points, setting stop-loss levels, or confirming other technical signals.

Why Use Fibonacci Retracement on REX American Resources Corporation?

REX American Resources Corporation is a company engaged in biofuels and renewable energy, which can exhibit volatile price movements due to commodity price fluctuations and regulatory factors. Using Fibonacci retracement on REX can provide insights into potential price corrections or continuation points during trending movements.

By applying Fibonacci retracement, you can:

• Identify key price levels to watch for potential bounces or reversals.
• Enhance your timing for buying or selling shares.
• Better manage risk through informed stop-loss placements.

Step-by-Step Guide: Applying Fibonacci Retracement on REX

Here’s a simple, straightforward way to use Fibonacci retracement on REX’s stock price chart:

Step 1: Choose Your Charting Platform

First, select a reliable charting platform that offers Fibonacci retracement tools. Popular options include TradingView, StockCharts, or your brokerage’s trading platform.

Step 2: Select the Time Frame

Decide on the time frame based on your trading style. For short-term trades, use daily or hourly charts. For longer-term investments, weekly or monthly charts are ideal. For REX, many investors find the daily chart effective for spotting retracement levels.

Step 3: Identify the Recent Significant Swing High and Swing Low

Look for the most recent significant peak (swing high) and trough (swing low) in REX’s price. These points define the range you’ll apply the Fibonacci retracement tool to.

Step 4: Draw the Fibonacci Retracement Levels

Using your charting tool, draw the Fibonacci retracement from the swing low to the swing high for an upward trend (or from swing high to swing low for a downtrend). The tool will automatically plot horizontal lines at the key Fibonacci ratios (23.6%, 38.2%, 50%, 61.8%, and 78.6%).

Step 5: Analyze the Price Action at These Levels

Watch how REX’s price behaves when it approaches these Fibonacci levels. Commonly, price will find support or resistance near these lines, which might lead to a reversal or a continuation of the trend.

For example, in an uptrend, if REX pulls back to the 38.2% retracement level and bounces upward, that level may act as strong support. Conversely, if the price breaks below this, it might head toward the next retracement level.

Step 6: Combine Fibonacci Retracement with Other Indicators

To improve accuracy, combine Fibonacci retracement with other technical signals such as moving averages, RSI (Relative Strength Index), or volume analysis. This helps confirm whether a retracement level will hold or break.

Practical Example: Fibonacci Retracement on REX

Let’s say REX American Resources recently moved from a swing low of $30 to a swing high of $45. Drawing Fibonacci retracement between these two points will plot levels approximately at:

• 23.6% retracement: $41.46
• 38.2% retracement: $39.26
• 50.0% retracement: $37.50
• 61.8% retracement: $35.73
• 78.6% retracement: $33.57

If the stock pulls back from $45, you might watch these levels for potential support. A bounce near $39.26 (38.2% retracement) could signal a buying opportunity, while a break below $35.73 (61.8% retracement) might warn of a deeper correction.

Tips for Using Fibonacci Retracement Effectively

• Be patient: Wait for price confirmation near Fibonacci levels before taking action.
• Use in conjunction: Never rely solely on Fibonacci retracements. Combine with trend analysis, volume, and other indicators.
• Adjust for volatility: Stocks like REX that can be volatile might require wider stop-losses around retracement levels.
• Practice makes perfect: Use demo accounts or paper trading to familiarize yourself with Fibonacci retracement on REX without risking capital.

Final Thoughts

Fibonacci retracement is a powerful yet easy-to-use tool that can help investors and traders analyzing REX American Resources Corporation to make more informed decisions. By identifying potential support and resistance levels, you can better anticipate price movements and manage your trades effectively.

Remember, no tool guarantees success, but combining Fibonacci retracement with solid research and risk management strategies can enhance your trading edge.

Ready to start? Visit TradingView’s REX chart to practice drawing Fibonacci retracements today!