Forex for a trader
Fibonacci forex system

Fibonacci forex systemComplex trading system #5 (Fibonacci trading) Traders were asking to post some strategies that will work on smaller time frames. Here is one very nice trading system that can be worth your attention. When a trader chooses to use small time frames (like 10 min, 15 min, 30 min even 1 hour) risks to be wrong are always higher than with larger time frames. Therefore, it is very important to have a really good Forex trading system that can advise on entries with high chances to win and what's more important it should be able to tell exactly where to exit without need to constantly monitor the price. Note also, the more traders look at charts, the more they tend to have controversial feelings about the success of a current open trade. With all this long introduction, it is only left to mention that this strategy will require from traders basic knowledge of use of Fibonacci tool. What is Fibonacci tool and how to use it? Simply Google "forex fibonacci" phrase and you'll find a lot of information about it. . This is probably the only reason we classified this trading system as Complex one, not every trader is comfortable with using Fibonacci studies in Forex. Trading setup: Time frame: any over 5 min and less than 3-4 hour. Currency pairs: any. Indicators: 5 WMA. Look at the price waves. Find the most recent swing high and the most recent swing low = so called Fibonacci A swing and B swing. Pull Fibonacci from A to B. To know which direction to pull (up or down) simply look at the trend; if it is unclear, find appropriate AB swings and set Fibonacci in both directions. Once set, wait and watch the retracement from AB swing to unfold. During the retracement there are three conditions to be met in order to consider trading: 1. The price must touch 5 WMA. 2. The price must at least touch 0.382 Fibonacci retracement level.

3. The 0.618 Fibonacci retracement level must not fail. Here it means the price should not close below (uptrend) above (downtrend) 0.618 retracement line. It can touch or poke it, but the level must withstand the "attack". When all three criteria are met, enter once the candle is clearly closed above 5 WMA for Long entry, below - for Short. Stop order is placed always 4-5 pips above (downtrend) below (uptrend) the 0.618 Fibonacci retracement level. Profit target is set to 1.618 Fibonacci expansion level derived from point A. Fibonacci Forex Strategy. The theory of a golden ratio explains a set of natural forms and phenomena, and, therefore, is actively used for the forecasting of numerical ranks of any kind. In the financial markets Fibonacci Forex indicators are used for determining the most probable moments of retracement and the target levels, and highlighting these levels directly on a price chart. Accurate mathematical calculation formula enables Fibonacci's indicators on Forex to be independent of any asset type, the period of calculation and other market parameters. Fibonacci methods in Forex. Nowadays technical tools based on Fibonacci numbers are included in a standard set of any trade platform.

Fibonacci lines, expansions, arches, a fan and temporary zones are commonly applied, but the first and the second indicators are the most widespread. The purpose of Fibonacci trading is to determine the depth of the possible correction, the retracement or continuation of a trend, price levels for setting up Fibonacci reasonable stop losses and for taking the optimum profit. Therefore, the correctness of setting Fibonacci lines plays a major role in the calculations. We will further remind the basic principles of drawing up Fibonacci lines. How can Fibonacci be used in Forex? On the upward trend the lowest point should be chosen as the starting one and further we will move up to the point where the current trend is being corrected at the moment. On the downward trend we choose the most upper point (a start of motion down) and we move to an expected point of the beginning of correction. Fibonacci can be used in Forex approximately in such a way: Traditionally there can be made calculations of the following Fibonacci levels: 0; 23.6; 38.2; 50; 61.80; 78.6; 100; 161.8; 261.8; and 423.6, fr om which 50, 78.6, and 100 are not part of the classical sequence and therefore these price levels are regarded as weaker ones. Nevertheless, the level 50 is considered to be the most probable for the completion of the medium-term corrections, and levels 38.2, 61.8, 78.6 and 161.8 are usually recommended for an entry in the direction of the main trend. For the Fibo lines to be drawn precisely there is a need for confident practical skills, namely an ability ‘to see’ the most significant price points on the graphics and to build trend lines correctly. Usually Forex trading Fibonacci assumes that where the price reaches the target levels or an obvious retracement takes place, the constructed grid can just be ‘adjusted’ to new extremes. Fibo levels will not be redrawn when a timeframe changes. Therefore the good result is yielded by setting up several grids of the lines - from the large timeframe to the smaller one. Then it is possible to perform the possible intermediate corrections within a global trend more precisely. Coincidence of the Fibo levels constructed on the various periods makes such price level especially strong. The trade methods stated below with the focus on the levels cannot be used as full Fibonacci Forex trade strategies, these are just trade schemes, reliability of which can be checked by the reader independently.

First correction Fibonacci Forex trading system. The technique uses high probability of the first 100% recovery of the price after a previous strong trend that proves that there is a possible retracement after a new extremum and an emergence of a strong new tendency. Fibonacci strategy more often uses such signal on opening of transactions against an ‘old’ trend. Parabola Hunt Fibonacci Strategy. If there are no speculative bounces, then movement of the majority of assets in the lines interval 0%-38.2% and 61.8%-100% represents quite precise parabola. It gives the chance for opening of the breakdown transactions: after an exit from the range of 38.2%-61.8% the probability of the strong movement in a zone of the previous extremum is high. Continuation Gap Extension. If someone constructs Fibonacci grid so that the range of a gap ‘is located’ around 38.2%-61.8%, then the level of 100% will show a final point of movement in the case of the movement continuation in the direction of a price gap. Overnight grid Fibonacci trading strategy. This Forex Fibonacci system is applied only to volatile assets. Fibo grid is drawn up from maxmin of the last trade hour of session till minmax of the first trade hour of the next day. The received levels are treated as strong indicators for intraday trade with small profits and close stops.

Second HighLow Forex Fibonacci Scheme. Fibonacci Forex strategy traditionally means that the first maxmin is not the most optimum point to start setting up Fibo grid. It is recommended to find at least small double top or a double bottom in a zone wh ere the current trend begins, and it is necessary to construct Fibo levels from the second key point. Accuracy of the levels constructed by such technique will be much higher. Stop Loss Fibonacci strategy. The first most popular Fibonacci Forex technique is the following: in case of an entry for the key level, we will put Stop Loss behind the next Fibo line. For example, if the entry is planned at the level of 38.2%, then we will put Stop Loss 2-5 points abovebelow than the level of 50% and further, if necessary, we move the stop order at the following Fibo levels. The second Forex Fibonacci strategy implies setting stop of initial price which is several points higher lower than maxmin of initial price fluctuation. If the price after all punches such extremum, then under Fibonacci trading Forex strategy the previous trend must have ended and it is really necessary to close a position. Correctly established Fibo lines successfully replace drawing strong price levels, but there still exist some ‘underwater’ stones of Fibonacci Forex trading. Availability and simplicity of application of Fibonacci strategy trading by the great number of traders has led to the fact that the huge number of players starts thinking similarly and carrying out same the same drawings, and, therefore, Fibo levels really become the strong supportresistance as the large trade volumes are concentrated on them. Therefore, a breakdown or kickback from Fibo levels usually causes operation of a huge number of the postponed orders, and consequently it amounts to the signal capable to affect a general tendency. Any Fibonacci Forex trading strategy for the market trade shall consider that in the zone close to Fibo levels speculative price bounces can possibly happen in case of a sharp breakdown.

It is recommended to wait until these bounces stop and open new positions only after the market direction is determined. Fibonacci price levels are not always accurately adjusted, and, therefore, the mere fact of achievement by the price of such value is not the basis for an entry at all. Any Fibonacci trading system shall be applied only along with other elements of the technical analysis. Fibonacci Trading – How To Use Fibonacci in Forex Trading. Fibonacci trading is becoming more popular, because traders have learned that Forex and stock markets react to the Fibonacci numbers. Fibonacci is the sequence of numbers discovered by Leonardo Fibonacci, an Italian mathematician: 0, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987, 1597, 2584, 4181, 6765, 10946, 17711, 28657, 46368, 75025, 121393 ……. Fibonacci numbers start from zero, and then 1 after that. The third number is calculated through adding 0+1 that are the first and the second numbers. The fourth number (3) is the second plus the third numbers (1+2). And so on… Looks easy, right? Now if you calculate the ratio of each number to the next one, you will have the Fibonacci Ratios that are the same numbers (levels) we use in our Forex or stock market technical analysis: 0.236, 0.382, 0.500, 0.618, 0.764 ……. To use these numbers in technical analysis you don’t have to make any calculations and you don’t even have to memorize them, because all trading platforms allow you to draw the Fibonacci levels and they have everything ready to use. The only thing you should know is how to use the Fibonacci levels to analyze the price chart and find the next price destination.

Fibonacci trading means to know when and where market reverses or keeps on following the same direction. The most important thing in Fibonacci trading is that the Fibonacci levels act as support and resistance levels. When the price goes up, they act as resistance levels and visa versa. Also like regular support and resistance lines, when a Fibonacci level is broken as a resistance, it can act as a support and be retested. It is the same as when a Fibonacci level becomes broken as a support. It will act as a resistance then. Why the Price Reacts to the Fibonacci Levels on Different Markets? The answer is “we don’t know”. The only thing we know is that Fibonacci numbers work in everything from the microscopic materials like DNA molecule to the distance between our eyes, ears, hands, even the distance of the planets in the solar system and the way they move in the space, even the distance and pathway of the stars in the universe, and finally in currencies’ prices and the way they move up and down. Fibonacci numbers can be found in everything in the world.

Nobody knows why Fibonacci numbers have such a feature. I think you have already seen the below painting by Leonardo Da Vinci (he is another Italian scientist and physician). If you draw Fibonacci levels on it (like what I did), you will see how Fibonacci numbers, specially the 0.618, work. They say 0.618 ratio can be seen in everything in our body in internal and external organs. How to Use the Fibonacci Numbers in Forex Trading? Fibonacci trading is not complicated. By using the Fibonacci numbers on the charts, you can find more supports and resistances. It will be a big help to choose the right direction and avoid taking the wrong positions. They are also so helpful in setting the stop loss and target orders. To use the Fibonacci numbers on the charts, you have to find the top and the bottom of the previous trend. When the previous trend is a downtrend, you draw the Fibonacci levels from top to bottom and extend the lines in the way that they cover the next completing and ongoing trend. When the previous trend is an uptrend, you draw the Fibonacci levels from bottom to top and extend the lines in the way that they cover the next completing trend. You have to wait for the trend to become matured. You can not plot the Fibonacci levels while the trend is not matured.

When you can not find a completed trend in a time frame, you have to look for one in a smaller or bigger time frame in the same currency pair or stock. For example, on the below chart I plotted the Fibonacci levels from the beginning of an uptrend that was started on 16 Aug 2007 to the end of it that was on 23 Nov 2007. I plotted the levels from bottom to top. Now let’s see how Fibonacci levels worked as support and resistance levels in the next trend. Please follow the red numbers on the below chart: 1. The price that started going down on 23 Nov 2007, touched the 23.60% level on 5 Dec 2007. This level worked as a support, and so the price went up as soon as it touched the level, but then went down to retest the 23.60% level. As you know, usually when the price cannot break a support or resistance, it tries again and again and sometimes it can succeed to break out of the level. 2. So the price went up, but tried to test the 23.60% level eight days later on 14 Dec 2007 and succeeded to break below the 23.60% level this time, and then it went down. 3. The price tested the 38.20% level on 17 Dec 2007 and tried to break below it for five days, but failed and so started going up on 23 Dec 2007. It touched the 23.60% level when it was going up and it could break above it on 27 Dec 2007. 4. On 31 Dec 2007 it went down to retest the 23.60% as a support. On 2 Jan 2008 it failed and went up. 5. Currently (17 Jan 2008) it is retesting the 23.60% level once again as a support, and if this time it breaks the 23.60% level, it will go down. If not, it will go up, or sideways. Let’s look at another example.

Please follow the red numbers on the below chart: A big downtrend on the GBPJPY daily chart started on 22 July 2007 and ended on 17 Aug 2007. So I plotted the Fibonacci levels from the top to the bottom (from 22 July 2007 to 17 Aug 2007). 1. While going up, the price tested the 23.60% level on 20 Aug 2007 and broke above it easily, but on the next day it went down to retest the 23.60% level as a support. It could not break below, and so the price went up. 2. The price didn’t show any reaction to the 38.20% level as a resistance and went up, but was stopped by the 50% level on 26 Aug 2007. From 26 Aug to 1 Oct 2007, price went up and down between the 23.60% and 50% levels. During this period of time, the 38.20% level worked as support and resistance several times and it seems that the price was rotating around the 38.20% level. It made a consolidation around the 38.20% level. 3. The 50% level was broken finally on 1 Oct 2007 and the price went up. 4. It had a hard time in breaking the 61.80% level. It tried for ten days from 5 to 16 Oct 2007 to break the 61.80% level, but failed and bounced down.

5. While going down, it passed through the 50% level without any problems, but it was stopped by the 38.20% level that acted as support on 22 Oct 2007. It went up on 23 Oct, tested the 50% level, went down on 24 Oct and then tested the 50% on 29 Oct and broke above it. 6. On 31 Oct 2007, it reached the 61.80% once again and tried for several days but failed again, went down and made a double top. The price went much lower after it failed to break above the 61.80% level. 7. On 9 Nov 2007 it broke below the 38.20% level and made a consolidation around the 23.60% level. Like the 61.80% level, the 23.60% level acted as support and resistance several times and a consolidation was formed around it. As you know, consolidations including, triangles, wedges, pennants and channels are continuation patterns. It means the price usually follows the same direction that it was following before the consolidation forms. 8. Finally it went down and broke below the 0.00% level on 2 Jan 2008. As you saw above, the price really reacts to the Fibonacci levels. Why do Fibonacci levels have such a strong impact on the markets. Why does the price become stopped sometimes for several days below or above the Fibonacci levels? Of course if you use the Fibonacci levels in the bigger time frames like weekly and monthly charts, you will see that sometimes the price becomes stopped by one of the Fibonacci levels for several weeks or months. The answer of the above questions has no impact on our trading.

I mean whether you know the reason or not, you can use Fibonacci levels in your trades. I know most of you don’t care about the answer, but some of you are eager to know. Fibonacci numbers are used in the formation of humans body, from the genes (DNA molecule) to the internal and external organs. So they should be effective in their behaviors too. Prices go up and down because of the behavior of traders: Buying and Selling >>> Bulls and Bears. Therefore, it is not surprising to see that markets react to Fibonacci levels. What Time Frame Is Better for Using the Fibonacci Levels? It depends on your trading system. You can use Fibonacci levels in all time frames. When you use them on the bigger time frames like daily, the result will be applicable for the next several days, weeks and even months and when you use them on smaller time frames like 5 minutes, the result can be applicable only for few hours because the price will leave the Fibonacci levels area very soon (it is not recommended to trade the shorter time frames, because they are not that stable and reliable and you will make a lot of mistakes because you don’t have enough time when trading the shorter time frames.) You Plotted the Fibonacci Levels on Your Chart. What Next? Fibonacci trading is using the Fibonacci levels as support and resistance levels and taking proper positions based on them.

As I already explained, Fibonacci levels act as support and resistance levels. So when the price is going up and you have already taken a long position (you have bought), you should be careful when the price becomes close to one of the Fibonacci levels. It is possible that it goes down and you lose the profit you have already made. So you have to move your stop loss to the open price of the first candlestick that is touching the Fibonacci level or a little higher. It depends on the length of the candlestick. If you’ve made enough profit, you can close your position and wait for the price to break the Fibonacci levels or fail and go down. You can take a new position then. It is the same as when the price is going down, but in this case Fibonacci levels act as support. Also keep in mind that when one of the Fibonacci levels is broken, the price usually pullback to retest. If you get ready for all these possibilities, you will not be trapped. You have to treat the Fibonacci levels as the real support and resistance levels. They really have no difference and sometimes the price reacts to them very strongly. More About Using Fibonacci in Forex Trading.

Fibonacci numbers really work in forex trading because they reflect the psychology of the traders. Trading forex or stocks is all about knowing the psychology of the traders: When most traders sell, the price goes down and when they buy, the price goes up. How can we know when traders decide to buy or sell? Fibonacci numbers are one of the tools that reflect what traders may have in their minds. One of the most important problems of the traders is that they really don’t know where to plot the Fibonacci levels. They can not find the start and the stop points for plotting the Fibonacci levels. They choose the wrong points to plot the Fibonacci levels and this causes them to make mistakes. 1. Ranging or Sideways Markets. One of the best places to plot the Fibonacci levels, is the resistance and support of the ranging markets. When the market is slow and in fact is in an indecision situation that means the traders are waiting for each others’ action and nobody wants to take risks before the others, the price fluctuation will become very small and the price goes up and down inside a range. We can see the ranging or sideways markets on all different time frames. A range, long or short, will be broken finally because the market cannot stay in an indecision situation forever. A range can be broken down or up, and this is what we want to know to take our positions and follow the markets. If you are a Fibonacci trader, all you need is finding a range on one of the time frames and then finding the high and low of the range.

Let me show you some examples. Please follow the notes on the image below as you are reading these explanations. The below chart is the GBPUSD daily chart. GBPUSD started moving sideways almost from 2008.01.22. The distance between high and low of this range was over 1000 pips. It was still tradable but obviously the market was not trending. Almost on January 2008, we could not guess that we are at the beginning of ranging market, but when the price went down on 2008.02.20 and retested the same support line at 1.9329 and then started going up again, we learned that we had a strong support at 1.9329 that could be the low of a range. Then, when the price went up and made a high at 2.0392 on 2008.03.14, and then went down and retested the 1.9329 support for the third time on 2008.05.14, it assured the traders that a ranging market was formed. On a ranging market, chart patterns like triangle, wedge or even head and shoulders can form. If the price breaks above the range, an uptrend will form, and visa versa. On the below chart, the price tested the 1.9329 support on 2008.05.14, it went up again but couldn’t reach the 2.0392 resistance and made a lower high at 2.0157 on 2008.07.15. When the price makes a lower high it means bulls (buyers) don’t have enough power to take the price up and make it reach the previous high it already reached. So, this can be considered as a signal that the range would be broken down. However, we should always wait for a real breakout: Almost all of the signs (higher lows) tell us that the range should be broken down. We have to wait until the breakout occurs. We don’t have to guess or predict anything.

When the support of the range is broken, we can go short and when the resistance is broken, we can go long. The signals indicated that the price would break below the range. Therefore, I plotted the Fibonacci levels from the low of the range to the top. So, the 0.0 level was placed at the high of the range and the 100.0 level was placed at the low. Also, all other 161.80, 261.80 and 423.60 levels were placed below the range. These numbers are called the Fibonacci Extensions: If the price had broken above the range, then we would have to plot the Fibonacci levels from top of the range to the bottom, and so the 161.80, 261.80 and 423.60 levels would be placed above the range. Now let’s zoom out and analyze the chart in more details. Please follow the below chart. The 2008.08.08 candlestick tells us that the price has broken below the range because it is closed below the range support. We could go short at the close of this candlestick if we were not already short after the formation of the 2008.07.15 lower high. Our target would be the 161.80 level. The stop loss has to be placed above the open of this candlestick.

When the price breakouts out of a range, the 161.80 level is the guaranteed target level that in 95% of the cases will be reached by the price. If the breakout is strong enough, the 261.80 and even the 423.60 will be reached too. Among the Fibonacci retracement levels or the levels that are placed between zero and 100, the 23.60 and 38.20 are the most important ones and as you can see the 2008.07.15 lower high is formed exactly below the 23.60 level. Before this lower high, we have a smaller lower high which is formed below the 38.20 level (the red arrow). Do you see how exactly and precisely the Fibonacci levels work? So we could go short at the close of 2008.08.08 candlestick and your target could be the 161.80 level. Let’s take a look at the next part of the chart. As you see (the below image) when the price reached the 261.60, it went up to retest the 161.80 level (follow the numbers – #1). It is time to emphasize on the importance of 161.80 level. This level works as a very strong supportresistance. When breaks below or above this level, it usually retest the level in 95% of the cases. On the below chart, the price goes up and retests the 161.80 level (#2) and then goes down.

You could go short again here, set the target at 261.80 and the stop loss above the 161.80 levels. Again when the price broke down the 261.80, it went up and retested this level, but the 2008.10.20 candle indicated that it would keep on going down again. Why the 2008.10.20 candle? Because it is a bearish candlestick that closed below the low and the close of the last 5 candles. It also has covered the whole bodies and shadows of the last three candles and have formed a bearish pattern which is called Dark Cloud Cover. This downtrend could be traded differently as well. You could wait for the price to break below the range support. Then you had to wait for the price to start going up and make the first correction, flag or consolidation. Then when it started following the downtrend to go down once again, you could go short. Take a look at the below image and you will know what I mean. I am now talking about the Elliott Waves. What I am trying to say is trading the second Elliott Wave which is the best one. 2. Trading the Second Wave after the Range Breakout. Please follow the numbers on the below chart. The below chart is the same chart above but with a different way of trading.

In many cases, a trend will be started when a range becomes broken (As you saw above). As I said ranging means indecision. When we have a ranging market, it means traders are waiting for each other to take the risk. They want the price to start moving and then take the proper position. They don’t want to take any risk before the others. When the market breaks out of the range (#1 in the below image), the traders who have been waiting for the market to move and break the range, follow the newly started trend and take the proper position (short position in this case) and this will provide more fuel for the price to follow the breakout direction (to go down in this case). Then after a while that the market keeps on moving, some traders decide to close their positions and collect their profit, and so the price starts moving to the other direction (#2 in the above image). But there are also a lot of other traders who keep their positions and wait for the price to start moving to the direction of the breakout again. These traders will add to their positions, and at the same time, some other traders who are late, will come and see the trend and take the proper position. So the price starts moving to the direction of the trend again (#3 in the above image). This is where most traders take their positions, because they believe that the trend is confirmed only when the price starts following the breakout direction once again. When the price starts following the breakout direction, it is the beginning of the second Elliott Wave which has the biggest movement and is the best to trade. Some professional traders only trade the second wave.

At the above image, the second wave is started at #3 and is finished at #8. Learn more about the Elliott Waves: Elliott Wave Analysis For Beginners. Fibonacci levels are the best tools to show us the waves and our entry and exit points: 1. Wait for the range breakout (#1). 2. Wait for the price to start moving against the breakout (#2). 3. Wait for the price to start following the breakout direction again (#3) and take the proper position (short position in this case) and set the target to the first low support line (#4) and set the stop above the 0.0 level. 4. Wait for the price to break below the first low support line (#4). 5. If it doesn’t do that, then close your position and wait for the price to follow the trend direction again. 6. If it breaks below the first low support line (#4), but goes up to retest the broken support (#5), then close your position and wait for the price to follow the trend direction again. 7. If it doesn’t break above the broken support and starts following the trend direction again (#5 and #6), then take the proper position again (short position in this case) and set the 161.80 level as the target. 8. If it breaks below the 161.80 level (#7), then hold your position, or if you have already closed it, take it again and set the target to 261.80 level (#8). 9. Wait for the price to retest the 161.80 (#9) and when it fails to break the 161.80 and starts following the trend direction again, take the position (short position in this case) and set the target to 261.80 again. 10. It is possible that it breaks the 261.80 level but retests it (#11, #12 and #13). If you see the trend is strong enough to move toward the 423.60 level, take the proper position (short position in this case) and set the target to 423.60 and place the stop loss above the 261.80 level. Your main profit could be made by trading the second wave (#3 to #8), and some traders do not take any position after that because in most cases the market becomes choppy after the second wave. Fibonacci Retracement Levels and Daily Candlesticks. Markets really react to the Fibonacci levels, no matter what time frame or currency market it is. Some of the Fibonacci numbers are more important for Forex traders. Indeed, 0.618, 61.80, 161.80 and 261.80 are the ones that work for us. 23.60 and 38.20 are also important but not as the 0.618 derivatives. I am going to show you some examples this week. The 2015.02.18 candlestick on GBPCAD daily chart formed a strong continuation signal above Bollinger Middle Band. Some traders are used to set pending orders above the high price of a candlestick like 2015.02.18 that has formed the setup. It makes sense to go long when the price breaks above the high price of the candlestick that has formed a long trade setup.

But the question is where you should set the stop loss and target orders? It is where you can use the Fibonacci Retracement Levels. Candlestick #1 on the below chart is the one that broke above the high price of 2015.02.18 candlestick. But as you see it was stopped by 161.80% level. A little below this levels is where you set your first target. You can close the first position here and then move the stop loss of the other positions to breakeven when the price reaches this level. 61.80% level is where you should set your stop loss. However, it is a little risky and usually markets retesttest this level. 38.20% level is a safer place for the stop loss. Of course, as I mentioned above, you can move the stop loss to breakeven when price reaches the 161.80% level.

In the below examples, you would be out by candlestick #2. I forgot to tell you how to plot the Fibonacci Levels based on the 2015.02.18 candlestick that has formed the trade setup. You should plot it from the candlestick’s high to low price, from top to bottom, so that the 161.80% and 261.80% levels be placed above. In case of short positions it will be the opposite. Candlesticks 2014.10.12 and 2014.10.19 formed a too strong long trade setup on GBPJPY weekly chart. GBPJPY went up strongly for over 1670 pips: Now let’s analyze the above movement using the Fibonacci Levels. I have plotted the Fibonacci Levels from the high to the low price of 2014.10.12 candlestick. Of course the long trade setup was reported when the next candlestick (2014.10.19) which is the confirmation candlestick closed. Based on the Fibonacci Levels, the stop loss had to be placed either where the 61.80% level is which is where we set the stop loss when we reported the trade setup on 2014.10.26 (see the above chart). GBPJPY went up strongly and it didn’t retest the 61.80% level. It strongly broke above 161.80% and 261.80% levels (#1 and #2 on the below chart), but was stopped by 423.60% level (#3). Then it went as low as 161.80% to retest this level, but it works as a support and made the price bounce up (#4). Now it has broken above the 261.80% level again: Next week can be an important week. AUDJPY went all the way up to retest the broken support line.

This week’s candlestick closed right below the line. Most probably next week’s candlestick will tell whether AUDJPY will go down, or it will break above the line again and will go up: Will AUDJPY reach the 161.80% level? GBPCAD has formed a Bearish Engulfing Pattern by 2015.02.24 candlestick. It is a short trade setup, but not a too strong and 100 score one. There are some negative points with it: The uptrend is too strong on the daily chart. This is the most important negative point. It is risky to go short against such a bullish market. 2015.02.24 candlestick Bollinger Upper Band breakout is not bad, but the engulfing is not that strong itself. It is possible that this signal takes the price down to the middle band or the 161.80% level, but I don’t take it, because it looks like a high risk trade setup. 2015.02.24 candlestick has formed a too strong Bearish Engulfing Pattern on the daily chart. Although the engulfing is too strong itself, but there is a weak Bollinger Upper Band breakout, and bulls still look strong.

Therefore, this is a 90-95 score short trade setup. USDCAD is forming a Bollinger Bands Squeeze on the daily chart. It is just the beginning. It can become much longer than this, but it can be broken very soon too: AUDUSD has been going down strongly during the past several months. It has formed a too strong downtrend. It has already formed a small Bollinger Bands Squeeze that was broken by yesterday’s candlestick. However, today’s candlestick has formed a too strong bearish body and so a too strong Bearish Engulfing Pattern: Now the question is whether this is a too strong short trade setup or not? It is a too strong Bearish Engulfing Pattern formed on a downtrend. So, it is a good continuation trade setup. The problem is it has already touched Bollinger Middle Band and it seems it is reacting to it as a support. I prefer not to take it. If it goes down after this candlestick, then I miss the movement. If it goes up, chances are it forms another too strong short trade setup with a better conditions. We were right about the negative points of NZDCAD short trade setup formed by 2015.02.24 daily candlestick.

However, from today’s candlestick, you can say that it is possible that if forms another short trade setup soon. It is strongly possible that the next candlestick becomes bearish. You can say this from today’s candlestick upper shadow. Let’s see. I will have to adjust the Fibonacci levels later. Just before you go, did you check This System? Make sure to do it now, otherwise you will regret. Read related articles: + Click Here to learn who we are and why this site was created. + Click Here to receive our eBook for free. Daily Fibonacci Forex Trading System. The daily Fibonacci forex trading strategy is an easy to use system that uses a single indicator known as the DailyFibonacci. ex4 indicator. This is basically an intraday system which allows the trader to take quick trades that are highly profitable. Chart Setup.

MetaTrader4 Indicators: DailyFibonacci. ex4 (default setting). Preferred Time Frame(s): 15-Minutes, 30-Minutes, 1-Hour. Recommended Trading Sessions: Any time. Depends on when the indicator signal appears on the chart. Currency Pairs: any. Free Download. Strategy. The indicator uses Fibonacci ratios to plot areas of support and resistance as well as pivot points. It also points out areas where the trader can go long or short, depending on whether these areas are support or resistance levels. Buy Example (click the image for full size): Long Entry Rules.

A long position is initiated when the following is displayed on the chart: Price candle takes off from the Intraday Long line (seen on chart as first buy area). If the price has advanced and sometime later in the trading day, prices retrace back to a broken support, use that area for a second BUY. In this chart, this occurs at the Intraday R1 line. Stop Loss for Long Entry: ?5-30 pips below the support line on which trade entry is based. Exit StrategyTake Profit for Long Entry: Knowing when to exit a trade is key and this can be achieved as follows: The next resistance line after trade entry is the 1 st TP point. If the resistance line on the TP area is broken, you can apply a trailing stop to protect profits and follow the trade to the end. Short Entry Rules. The indicator will display the short entry line as “Intraday short”, along with the entry price as shown on the chart. Once price is rejected at the intraday short line, take the Sell 2 signal by going short on the currency pair. Price must have been rejected at least 3 times at the intraday short line to make this area a valid resistance for a short trade. In other words, the Sell 1 signal should be ignored. Stop Loss for Sell Entry. ?5-30 pips above the intraday short line.

Exit StrategyTake Profit for Sell Entry. The exit strategy on a short position should be guided by the upcoming support lines on the chart. Naturally, the nearest support line should be used as the 1 st TP target (TP1). Sometimes, the move may be very strong and will break that support (i. e. close below the support), as is the case with this chart. In this instance, you may use the next available support as the profit target (TP2 on the chart) Download Now. About The Trading Indicators. The DailyFibonacci. ex4 indicator not only traces the daily pivot points, but also points of price retracement and extension within the context of one trading day. All positions are resolved same day. This indicator surely merits being listed as an indicator with potential for use on the MT4 platform. Fibonacci Trading System. November 29, 2014 By Hung Vu 1 Comment. Fibonacci Trading System. Time Frames 5 min, 15 min, 30 min, 1H, 4H, daily.

Currencypairs: – All major pairs. You may use it for EURUSD, GBPUSD and all other major pairs. Attach the indicators to your chart – The software will automatically determinate a current trend, HIGHs and LOWs and print all the information on your chart: Current trading opportunity – entry level, stop loss level, 3 take profit level. 1 – Recommended stop loss level ( based on the Fibonacci numbers) 2- If a current trend is down ( bearish ) your entry level ( in this case SELL) When a trend will change – the Fibonacci indicator will automatically re-print all the entries, SL, TP for a new trend. 3- Take profit – level 1 ( normal) 4 – Take profit level 2 – aggressive 5 – Take profit level 3 – high aggressive. Built in highlow; openclose indicator Daily highlow and openclose levels are strong support and resistance levels. Those levels are used by the Fibonacci indicator and may help you understand where you can expect price to go (optional). Usually highlow used by traders to identify strong market level that helps to manage trades. In our case you don’t have to worry about it – highlow and openclose is used by the “Fibonacci indicator” software in combination with Fibonacci to optimize SL, Entry, TP 1, TP 2, TP3 levels and print them on your charts. Rules for Fibonacci Trading System The Fibonacci indicator will show you exactly where to enter a trade, where to exit and where to put a stop loss. These levels are based on Fibonacci levels and work very well. The Fibonacci indicator SELL signal with filter indicator that confirmed the entry (Sell Arrow). The Fibonacci BUY signal with filter indicator that confirmed the entry (Sell Arrow). Fibonacci Trading System exit position Stop Loss Place your stop loss exactly where the software advices you “STOP LOSS LEVEL” – the price of SL printed in red on your chart ( in our case SL = 1.36327 ). Stop will be calculated and printed on your chart automatically for each new trade.

1. Option I. Set your own profit target, for example 20 pips per trade and exit all trades as soon as you reach your profit target – do not wait until the price hits the indicator’s “profit: level normal”. This is the safest way of trading and reduces your risk level. 2. Option II Exit trades when the price is close or touches the Fibonacci indicator “PROFIT: LEVEL” level (either “profit level normal” or “profit level aggressive”). High aggressive level is risky and should be used by experienced traders only. How to Use Fibonacci Retracement to Enter a Trade. The first thing you should know about the Fibonacci tool is that it works best when the forex market is trending. The idea is to go long (or buy) on a retracement at a Fibonacci support level when the market is trending up, and to go short (or sell) on a retracement at a Fibonacci resistance level when the market is trending down. Finding Fibonacci Retracement Levels. Then, for downtrends, click on the Swing High and drag the cursor to the most recent Swing Low. For uptrends, do the opposite. Click on the Swing Low and drag the cursor to the most recent Swing High.

Now, let’s take a look at some examples on how to apply Fibonacci retracements levels to the currency markets. This is a daily chart of AUDUSD. Here we plotted the Fibonacci retracement levels by clicking on the Swing Low at .6955 on April 20 and dragging the cursor to the Swing High at .8264 on June 3. Tada! The software magically shows you the retracement levels. As you can see from the chart, the Fibonacci retracement levels were .7955 (23.6%), .7764 (38.2%), .7609 (50.0%), .7454 (61.8%), and .7263 (76.4%). Now, the expectation is that if AUDUSD retraces from the recent high, it will find support at one of those Fibonacci retracement levels because traders will be placing buy orders at these levels as price pulls back. Now, let’s look at what happened after the Swing High occurred. Price pulled back right through the 23.6% level and continued to shoot down over the next couple of weeks. Later on, around July 14, the market resumed its upward move and eventually broke through the swing high. Clearly, buying at the 38.2% Fibonacci level would have been a profitable long-term trade! Now, let’s see how we would use the Fibonacci retracement tool during a downtrend. Below is a 4-hour chart of EURUSD. As you can see, we found our Swing High at 1.4195 on January 25 and our Swing Low at 1.3854 a few days later on February 1. The retracement levels are 1.3933 (23.6%), 1.3983 (38.2%), 1.4023 (50.0%), 1.4064 (61.8%) and 1.4114 (76.4%). The expectation for a downtrend is that if price retraces from this low, it could possibly encounter resistance at one of the Fibonacci levels because traders who want to play the downtrend at better prices may be ready with sell orders there. Let’s take a look at what happened next.

Yowza, isn’t that a thing of beauty?! The market did try to rally, stalled below the 38.2% level for a bit before testing the 50.0% level. In these two examples, we see that price found some temporary forex support or resistance at Fibonacci retracement levels. Because of all the people who use the Fibonacci tool, those levels become self-fulfilling support and resistance levels. One thing you should take note of is that price won’t always bounce from these levels. They should be looked at as areas of interest , or as Cyclopip likes to call them, “ KILL ZONES! ” We’ll teach you more about that later on. For now, there’s something you should always remember about using the Fibonacci tool and it’s that they are not always simple to use! If they were that simple, traders would always place their orders at Fibonacci retracement levels and the markets would trend forever. In the next lesson, we’ll show you what can happen when Fibonacci retracement levels FAIL. What Forex Strategies Use Fibonacci Retracements? Forex traders use Fibonacci retracements to pinpoint where to place orders for market entry, taking profits and stop-loss orders. Fibonacci levels are commonly used in forex trading to identify and trade off of support and resistance levels. After a significant price movement up or down, the new support and resistance levels are often at or near these trend lines.

What Are Fibonnacci Retracements? Fibonacci retracements identify key levels of support and resistance. Fibonacci levels are commonly calculated after a market has made a large move either up or down and seems to have flattened out at a certain price level. Traders plot the key Fibonacci retracement levels of 38.2 percent, 50 percent and 61.8 percent by drawing horizontal lines across a chart at those price levels to identify areas where the market may retrace to before resuming the overall trend formed by the initial large price move. The Fibonacci levels are considered especially important when a market has approached or reached a major price support or resistance level. The 50 percent level is not actually part of the Fibonacci number sequence, but is included due to the widespread experience in trading of a market retracing about half a major move before resuming and continuing its trend. Daily Fibonacci Forex Trading System. The daily Fibonacci forex trading strategy is an easy to use system that uses a single indicator known as the DailyFibonacci. ex4 indicator. This is basically an intraday system which allows the trader to take quick trades that are highly profitable. Chart Setup. MetaTrader4 Indicators: DailyFibonacci. ex4 (default setting). Preferred Time Frame(s): 15-Minutes, 30-Minutes, 1-Hour.

Recommended Trading Sessions: Any time. Depends on when the indicator signal appears on the chart. Currency Pairs: any. Free Download. Strategy. The indicator uses Fibonacci ratios to plot areas of support and resistance as well as pivot points. It also points out areas where the trader can go long or short, depending on whether these areas are support or resistance levels. Buy Example (click the image for full size): Long Entry Rules. A long position is initiated when the following is displayed on the chart: Price candle takes off from the Intraday Long line (seen on chart as first buy area). If the price has advanced and sometime later in the trading day, prices retrace back to a broken support, use that area for a second BUY. In this chart, this occurs at the Intraday R1 line. Stop Loss for Long Entry: ?5-30 pips below the support line on which trade entry is based. Exit StrategyTake Profit for Long Entry: Knowing when to exit a trade is key and this can be achieved as follows: The next resistance line after trade entry is the 1 st TP point. If the resistance line on the TP area is broken, you can apply a trailing stop to protect profits and follow the trade to the end. Short Entry Rules. The indicator will display the short entry line as “Intraday short”, along with the entry price as shown on the chart.

Once price is rejected at the intraday short line, take the Sell 2 signal by going short on the currency pair. Price must have been rejected at least 3 times at the intraday short line to make this area a valid resistance for a short trade. In other words, the Sell 1 signal should be ignored. Stop Loss for Sell Entry. ?5-30 pips above the intraday short line. Exit StrategyTake Profit for Sell Entry. The exit strategy on a short position should be guided by the upcoming support lines on the chart. Naturally, the nearest support line should be used as the 1 st TP target (TP1). Sometimes, the move may be very strong and will break that support (i. e. close below the support), as is the case with this chart. In this instance, you may use the next available support as the profit target (TP2 on the chart) Download Now. About The Trading Indicators. The DailyFibonacci.

ex4 indicator not only traces the daily pivot points, but also points of price retracement and extension within the context of one trading day. All positions are resolved same day. This indicator surely merits being listed as an indicator with potential for use on the MT4 platform. Power Fibonacci Course. Get the Tools and Skills to Trade with Confidence. The Power Fibonacci Course can teach you to hack the Fibonacci sequence in seconds, so you can be confident every time you trade. Find Out How to Attend the Next Live Class. Take Your Technical Analysis to a Whole New Level. Learn how the Power Fib Trading System could net you big trading wins! FX CHIEF™, aka Jared Martinez, is a veteran trader with over 30 years of experience trading in the Forex market successfully… And he’ll walk you through the Power Fib Trading system, and how you can apply it in different market scenarios for big trading wins.

If you’re a follower of Jared’s trading methodology — or just beginning as a Forex trader — this course and system package is a great way to learn how you could start earning using Fibonnacis. Forex Auto Fibonacci Retracement Indicator. Table of Contents. The easiest and simplest indicator to spot a perfect reversal point… Auto Fibonacci Retracements Identifies High Probability Swing Levels of The Trend Momentums. It Makes You Relax While Trading Because It Spots The Place in Advance Where You Should Look For The Expected Reversal. This indicator works at any currency pair and any time frame as long as price naturally retraces and perfect for all genre (scalpers, intraday swinglong-term) of traders. The most important thing is, it is easily usable by newbie traders. Forex Auto Fibonacci Retracements Indicator. Mostly price doesn’t keep moving in a single direction all the time as sometime it takes a break with a retracement or pullback then resumes moving towards the trend direction again. If you can’t catch the right retracement point then you’ll be able to get better length of momentum with a greater probability of winning a good level of risk to reward ratio. Let’s go a little deeper with the chart demonstration: Forex Auto Fibonacci Retracements Indicator Buy Parameters. This is an AUDUSD hourly chart. Price was initially in a uptrend then it started to retrace back. You see the various levels of retracement lines showing the most possible swinging point of price from where it will restart moving upwards again.

At a point price took support from the 38.2% retracement level which is our buy area. Stop loss will be set right below the swing level. As we can see price really jumped up from that level and went away to the north. Do Not Miss : Forex RSI MA Trading Strategy. Auto Fibonacci Retracement considers the high and low of the current trend and automatically generates the possible retrace levels for traders. Let’s see some more examples: Auto Fibonacci Retracements Indicator Buy Parameters. At this GBPUSD hourly chart, price trending up initially and later retraced twice to the level of 23.6% and each time took support from the respective level. In both cases price went up and kept the bullish momentum alive. Now, let’s look at a bearish trend retracement entry: Forex Auto Fibonacci Retracements Indicator Sell Parameters. This is a EURUSD hourly chart.

There was a massive selling force at the early stage of the chart and the retracement level was also huge. It retraced above 62.8% but letter returned back below of that area confirming that the initial bearish force is taking control of the momentum again. Auto Fibonacci Retracement is a trend following Indicator. So, traders should be able to detect the trend correctly before applying this indicator. Free Download Forex Auto Fibonacci Retracement Indicator.



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