Hi there, quite new to Forex trading, past 6 months,
Been using Fibonacci levels for trading along with moving averages etc to get a big picture of the trend.
Just want to make sure im drawing them correctly, in an uptrend you draw from swing low to swing high so 100% is at the top, and in a down trend the opposite??
I have watched loads of youtube clips but want to make sure what im using is correct
Thanks
Hello, Steve. — Welcome to this forum.
Regarding Fibonacci:
You are correct.
No, it’s the reverse. The 100% level is always where you START drawing your Fibonacci swing.
So, in the case of an uptrend, you draw your fib from the swing low to the swing high, as you stated above.
In this case, the scale of percentages on your fib shows how much price RETRACES [I]downward[/I] from the swing high. If it retraces halfway, then that corresponds to the 50% fib level. If it retraces all the way back to the level of the swing low, then that represents a 100% retracement.
Hi Steve,
Just to share regarding Fibonacci, since I am also using it a lot for my advanced pattern trading.
One of the more subjective part of drawing Fib is also in identifying the swing low and swing high.
You might want to consider using the fractal indicators to help you identify these more important swing point.
Hi Clint, Pipdaddy and AKyoung.
Many thanks for your help!
Ok got the Fib drawings. but as @[B]akyoung [/B]stated working out the swing low to swing high, or if we are going from an uptrend changing direction towards a downward trend.
For example, I have a fib drawing on EUR/USD on a 15min timeframe - as we are in a downtrend on EUR/USD my high 100% at 1.28471 and my low 0% at 1.27064.
I can see my 100% has been resistance, bounced off the 23.6% fib mark a few times and today 21st/10/2014 has finally broken the 23.6% mark and I am now short on EUR/USD
Is the 15min timeframe ok to work with Fib levels…?
I have watched plenty of YouTube tutorials and read about Fibonacci levels and it’s seems a very powerful in Forex trading.
Hi I trade with fib. I have used and use it on 15 minute time frames. What you have to be careful of is Fibonacci works best when price is trending. You can use it when it’s ranging, but you have to be careful.
If you haven’t see this video yet, watch it and in my opinion if you have watch it several more times; it’s the best fib video out there. You’ll find that most fib traders will have their own opinion on what video’s are better, but when you get right down to it, the actual strategy numbers don’t change as far as high probability entries, profit targets, and stop losses.
Good Luck
Gp
Yes steve, it works on lower timeframe as well. But as a start, I always encourage traders to look at the daily, h4 and at most h1 tf.
If you are using fib to trade trend continuation, markets need to be in a distinct trend. If the market is in consolidation or ranging, you can use fib to trade advanced harmonic patterns.
Hope these clear some of your doubts.
THe point is that again you need to determine low point of the trend and possible high point before drawing Fibs and working out retracements. But what for Fibs drawings if you already anticipate where price will go? Just follow the direction and that’s it.
Excessive drawings on the chart won’t yield you much results but confuse instead, giving wrong or contradictory information. Be careful with them