Hi everybody,
I’m not sure this is the right place in the forum to ask this question, so please correct me if its not.
I’d like to use and draw fibonanacci lines in my charts, my question is whats the criteria to draw? I mean from which highs and lows am I supposed to start drawing. Let’s take the example of gbp/usd daily chart for instance. Cable has been falling since Jan 24th, so would that be the starting point? Appreciate your help:)
Hello Jack 1972!
Good question!
For your specific example, I would draw the Fibonacci from the 28th January, instead, because the levels that you will get fit the candles much better - in my example, they are drawn on the 4-hour time frame.
Hello again,
just wanted to add this, which was Michael Boutros at the FXCM live expo 2012 explaining Fibonacci retracements and extensions:
Beginner Fibonacci - Michael Boutros | FXCM Expo 2012 - YouTube
I hope that you may find this useful!
Regards
Also, try layering your Fibonacci across time-frames, for example as shown here,
where I zoomed out and added a layer of retracements on the Daily time-frame,
over the 4-hour ones that I showed you before; this time, I have traced the BULLISH
move from 12th Nov. 2013 to 24th Jan. 2014, so this time the retracement move will
be of the bull trend (i.e. the 100% retracement would mean that the pair had gone
back to the lowest point of this bullish move):
Move the start and end point to either the close or the low of the chosen candles, and see whether the resulting
Fibonacci levels line up with a number of candles within the range; if none of the levels match with any of the
interim candles’ low/high or open/close levels, then either the Fibonacci trend line has been drawn on the wrong
levels or it will not be much of a help to your trading.
Fibonacci levels tend to be more useful on higher time-frames, but I do not want to say the wrong thing here, so
go ahead and try them on 8-hour and 4-hour charts if it suits your trading…
Also, combine Fibonacci with your own Support and Resistance lines/levels and see if they overlap - combinations
of Fibonacci levels and Support/Resistance lines tend to indicate strong levels that may more likely be respected
as support or resistance.
I hope this helps!
Happy trading.
Also, try layering your Fibonacci across time-frames, for example as shown here,
where I zoomed out and added a layer of retracements on the Daily time-frame,
over the 4-hour ones that I showed you before; this time, I have traced the BULLISH
move from 12th Nov. 2013 to 24th Jan. 2014, so this time the retracement move will
be of the bull trend (i.e. the 100% retracement would mean that the pair had gone
back to the lowest point of this bullish move):
Move the start and end point to either the close or the low of the chosen candles, and see whether the resulting
Fibonacci levels line up with a number of candles within the range; if none of the levels match with any of the
interim candles’ low/high or open/close levels, then either the Fibonacci trend line has been drawn on the wrong
levels or it will not be much of a help to your trading.
Fibonacci levels tend to be more useful on higher time-frames, but I do not want to say the wrong thing here, so
go ahead and try them on 8-hour and 4-hour charts if it suits your trading…
Also, combine Fibonacci with your own Support and Resistance lines/levels and see if they overlap - combinations
of Fibonacci levels and Support/Resistance lines tend to indicate strong levels that may more likely be respected
as support or resistance.
I hope this helps!
Happy trading.
Hi Pipmehappy,
Thank you so much for your help, thats very valuable indeed. I cant wait to put that on my charts. Cheers!
I’m a fib trader. In addition to above advice make sure you confirm your thoughts, with prior support and resistance levels. I also confirm with Stochastic.
Below are my favorite 2 fib video’s. Both these traders sell products, I’m not vouching for their products, but as far as fib retracements and extensions, they’re great and free. Very much worth spending a couple of hours. If you watch them in the order, you will get more out of them. If lyou watch them both
Gp
Have you ever tried to hand reading?? What criteria do you use? The same.
