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Thread: fibonacci extension tool in mt4

  1. #1
    maxim123 is offline Newbie
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    Default fibonacci extension tool in mt4

    In my previous thread I just asked about the fibonacci extension. But as I couldn't find the tool in my mt4 software. I want to ask about what to do so that I can draw extension just like shown here: http://www.babypips.com/school/images/grade3/fibonacci-extension-uptrend-end2.png

    I have attached the screenshot of my mt4 software. Its of instaforex company. So those who works under instaforex, please help me in this cause I am feeling so frustrated.
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  2. #2
    maxim123 is offline Newbie
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    I read the article again and learned how to make fib extension. But didn't understand some parts of it. In the figure no. 1 of fib extension http://www.babypips.com/school/image...trend-end2.png here it is said that 61.8%, 100% and 161.8% levels are good for taking profits but I didn't understand whether it meant going long or short at those level cause they are both resistance and support level.
    and in http://www.babypips.com/school/image...trend-end2.png here they provide support and the article says we could have taken some profit here too, what does that mean? cause the levels provide support and their aren't much buy order, how could we take the profit at those levels?

    Fibonacci Extensions | Fibonacci | Learn Forex Trading
    Last edited by maxim123; 07-30-2011 at 11:15 AM.

  3. #3
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    Sweet Pip is offline FX-Men Honorary Member
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    Before you worry about where to take profit, first you have to first figure out if you should place a buy (long) order, or a sell (short) order.

    Once you do that, then you draw the fibs in that direction.

    If you are going long you draw from a low "up" to a high and the extensions are only considered resistance.

    If you are going short, you draw from a high "down" to a low and they are only support.

    Any lines (fibs, pivots, trend, moving averages, etc) above price are resistance....any lines below price are support.
    Last edited by Sweet Pip; 07-30-2011 at 01:56 PM.
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  4. #4
    maxim123 is offline Newbie
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    Ok. But if it is not annoying, can you tell me what the article in babypips meant to say where it said that those levels could be used for some profits cause I somehow don't think that the words and the figures didn't match(only a newbie thought ).

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    Sweet Pip is offline FX-Men Honorary Member
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    I don't find it annoying at all. Maybe your confusion is because they are describing what happened "after" the fibs were drawn. Price stopped retracing down to the 50% level because a lot of buyers came in and price starts going back up. At this point the rest of the chart is still blank and if you were one of those buyers, you'd have to decide which of the fib resistance levels (extensions) you would close out your order at. Babypips example went on and gave a play by play for you to follow along showing how price moved up and down as it zigzags along it's way. One minute a line can be resistance, then the next the same line can be support...it depends on whether price is above it or below it. But when you first drew them they were either all support or all resistance. As price moves up or down thru them, they change.

    Have you read the chapter on support & resistance yet? Support and Resistance | Support and Resistance Levels | Learn Forex Trading
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  6. #6
    maxim123 is offline Newbie
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    Ok I again read the fib extensions and understood it now . It was just a bit of confusion there
    Thanks for you always fast answer. Anyhow I wasn't confused at the 50% level, it was a bit another topic after I thought about it again.
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  7. #7
    maxim123 is offline Newbie
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    yeah other question:
    In head and shoulder formation, Should the lows of head touch the neckline too? I mean is it compulsory?

    and what time frame would be a very good choice for the chart patterns given in grade 7 of school of pipsology? I mean in which time frame there is more chance of those patterns appearing along with good profit.
    Last edited by maxim123; 07-31-2011 at 01:48 PM.

  8. #8
    Sweet Pip's Avatar
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    Quote Originally Posted by maxim123 View Post
    yeah other question:
    In head and shoulder formation, Should the lows of head touch the neckline too? I mean is it compulsory?

    and what time frame would be a very good choice for the chart patterns given in grade 7 of school of pipsology? I mean in which time frame there is more chance of those patterns appearing along with good profit.
    I think the lows of the head form the neckline....so yes!

    Here's another example Head and Shoulders: The Free Forex Encyclopedia

    If you looked at a 5min chart and a daily chart, without any reference to what timeframe they are, you can't tell them apart...that's apparently what is meant by being "fractal". They appear on all timeframes however, the range of the pattern is relative to it. Meaning, if you find it on five-minute chart, then you can expect less pip movement to complete the pattern in a shorter time (hours), whereas on a daily you can expect greater pip movement over a longer period of time (weeks). Which one you see it on then determines how you calculate the position size by the size of the risk. You can make the same profit (or loss) on either timeframe by adjusting the size of your position to accomodate it.

    Of course that is just one school of thought
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    maxim123 is offline Newbie
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    Thanks. and in MACD there is only the difference of 12 and 26 period moving average shown in the indicator and the histogram. I am not able to put 9 period moving average in the indicator. Can you please give some advice?

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    Quote Originally Posted by maxim123 View Post
    Thanks. and in MACD there is only the difference of 12 and 26 period moving average shown in the indicator and the histogram. I am not able to put 9 period moving average in the indicator. Can you please give some advice?
    Do you mean the macd that comes with MT4? And when you say you are not able to put the 9 period ma, does that mean there is no input box for it, or do you mean it doesn't seem to display it when you attach it to a chart?
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