Fibonacci retracement trading strategy


There is no doubt that many traders were also watching the 55% retracement level and the % retracement level, but in this case the market was not bullish enough to reach those points. Instead, EUR/USD turned lower, resuming the downtrend and taking out the prior low in a fairly fluid movement.

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Complex trading system #5 (Fibonacci trading) | Forex

While each set covers a particular topic, there are many other topics covered in the videos as well - so each set of videos comes with some surprising "extra" insights!

This figure is called Phi or the Golden Ratio. The inverse of . The Golden Ratio mysteriously appears frequently in the natural world, architecture, fine art and biology.

Another Fibonacci trading technique that uses time is the Fibonacci time zones. It projects time extensions using Fibonacci numbers instead of Fibonacci ratios. From the chosen point, it extends 6 bar to the right followed by 7 bars, then 8 bars. Then, another 5 bars followed by 8 bars and so on. You get the idea.

Fibonacci retracement levels are depicted by taking high and low points on a chart and marking the key Fibonacci ratios of %, %, % horizontally to produce a grid. These horizontal lines are used to identify possible price reversal points.

My trading is now more focused and precise and I have clear and well defined rules which allow me to react more appropriately to what I see on the chart. For the first time I really feel that I am trading with purpose and direction and have a better understanding of price action.

From these ratios, we got a whole host of Fibonacci trading techniques. These techniques have grown in application and complexity. And it is definitely possible to build a trading strategy completely around Fibonacci trading techniques.

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The most significant Fibonacci retracement level to watch for is the . This is the inverse of the golden ratio, or phi. The retracement level tends to be the maximum pullback zone where fear climaxes as the final sellers throw in the towel and bargain hunters rush into the stock to resume the uptrend. On downtrends, the price level should be where the final buyers are exhausted as sellers take the opportunity to unload their positions and short-sellers jump off the fence to push down the price and resume the downtrend. Some traders prefer to wait for two to three candlestick closes above or below a Fibonacci retracement level to confirm support or resistance before placing a trade.


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