Plotting a trend line on a Forex chart gives very valuable information. In addition, it will also help to determine good entry and exit points, best positioning for profit taking and placing protective stops. So, shall we learn how to draw trend line to make it our good friend in profitable forex trading? That is why when the trend is going using fibonachi with the forex change our trend line will be crossed, which therefore will give us a signal that the price can start moving in another direction.
In the uptrend, Forex trend line is drawn through the lowest swing-points of the price move. Connecting at least two «lowest lows» will create a trend line. In the down trend, trend line is drawn through the highest swing-points of the price move. Connecting at least two «highest highs» will create a trend line. Keep in mind that same charts may show slightly different “highs” and “lows” if you try to compare different Forex brokers.
Another sample of drawing trend lines: main and inner downtrend lines. Forex trading is a high risk investment. All materials are published for educational purposes only. Leonardo Fibonacci is a famous Italian mathematician, founder of a simple series of numbers that refer to ratios valid for natural proportions of things on the planet.
If to measure the ratio of any number to one of the next higher number the result will be 0. 618 — are the most important to watch for. Fibonacci Extension Levels are used as targets for taking profit: 0. 618 — here are the most useful for traders. Fibonacci retracement and extension levels carry important information for experienced as well as novice Forex traders as they help to identify entry and exit points during the trade. This chapter will introduce traders to basic rules of applying Fibonacci method in Forex. And now let’s get straight to the point.
Where and how to use Fibonacci study on Forex charts? As you have noticed, there are some A, B, C, D points on the chart. They represent the highest spikes of the price moves or simply highest price swings. To apply Fibonacci study to the price moves we will always look for those points. Forex trading is a high risk investment. All materials are published for educational purposes only.
Who’s online There are currently 7 users online. Submitted by Edward Revy on June 30, 2007 – 13:27. 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. 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.
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.
Time frame: any over 5 min and less than 3-4 hour. Fibonacci A swing and B swing. Pull Fibonacci from A to B. AB swings and set Fibonacci in both directions.
Once set, wait and watch the retracement from AB swing to unfold. The price must touch 5 WMA. The price must at least touch 0. 618 Fibonacci retracement level must not fail. 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.