Fibonacci Retracements help you identify buying and selling opportunities in the stock market.

Here's exactly how to pinpoint those Fibonacci retracement levels:

First, find a stock chart with an obvious high and low price.

Second, note the high and low price.  These levels will be used to calculate the fibonacci retracement levels.

Third, type in the price levels into the fibonacci calculator and click "Calculate".  

That's all there is to do.  The Fibonacci Calculator will tell you what the 38%, 50%, and 62% retracement levels are.  Those are the price levels where you will look for buying or selling opportunities.

Qlogic tags the Fibonacci Retracement levels.

The weekly chart for Qlogic shows a significant low in September 2001 at $17.203.  The stock looks like it formed a double top at $57.094 in early 2002.

The 38% retracement level occurs at $41.86, the 50% retracement level is at $37.15, and the 62% level is at $32.44.

What does the stock do?  It just touches the 50% retracement level during the week of April 2002.  Traders who bought the stock near that price level would see their investment gain more than 20% in less than two weeks.

If you are interested in learning more about this way of trading, read Stephen Pierce's Fibonacci Secrets.

Go ahead and use this handy tool to help pinpoint a low risk opportunity!  Or continue reading for an example of picking stock market tops and bottoms using fibonacci retracements.