Hi guys, my name is Kieran and I am new here and new to forex trading. I was reading over in the school section when I got to the Fibonacci stage, at first I had no clue then I got what a swing high and swing low was and discovered I could draw the lines using the tool on my broker (Etoro). I then drew this line (this was just a test and I was not using it in a real situation) and I was wondering what this will help me to do and how it will help me to do so + did I do it right?
Ok, it doesn’t look like your Fib is in the right place.
Correctly positioning the Fibonacci:-
Look across the chart at the 1.3295 level. In the middle of your picture there is a green candle with a wick that extends higher that the wicks on either side, and marks the top of the big peak in your picture. This is the most recent ‘swing high’, ie, the point of the trading history that most recently has given you a high water mark. [There are more fine ways you can think of ‘swing high’, like a candle and wick that are higher than those either side, but these are just an expression of volatility in a larger trend].
Next you need to look for the most recent ‘swing low’. This is not the chariot in the rugby song, but the lowest trading tick since the ‘swing high’ (or vice versa, if you see what we mean). Looks like this level is 1.3220, where there is a big bad red bear candle with a short wick.
Redraw your Fib with the swing high at 1.3295 and the swing low at 1.3220.
What can you do with your Fib?
Each of the lines are support and resistance levels. You can enter trade orders above or below a line (they will be triggered as the support/resistance line is broken) and then exit at the next line. Your SL should be the other side of the line - perhaps 10 pips below to give the trade some room, but more if the gaps between the Fib lines are significant in pips - since if the trade goes back through the line then your entry hypothesis has just been proved wrong.
Fibs are going to help you most if you establish that there is a trend and then you use the Fib levels as entry and exit. In a strong trend, you can use each successive Fib level as a trailing stop! Woohoo! Imagine how you can run your trade!
In a ranging market, Fibs will help you establish the outer bounds of the range of values and
(a) if there is a breakout
(b) where you should enter/exit within the range.
We’ve used strategies with just Fib and candlestick patterns to great effect. Our flagship approach using only candlestick to spot reversals and Fib to set TP levels as a 75% win rate.
your feb levels are not correct go and watch few videos of fibo,you will get the idea where to draw corectly.and where to enter trade and where to exit trade
Here’s a real example for you. AUDJPY. Look at 12 October bull candle. The low was below the 11 and 13 October lows on the daily chart. This is your swing low. Now look at the 17 October bear day. The high was above the prior high, and the high for 18 October as well. This is your swing high. If you pop on a Fibo starting with the 17 October and drag to the 12 October low, then you will see all the Fibo levels pop up. Imagine that you did this on the 19 October [the first day that you could have known the 17 October candle had given you the swing high]. Then if you wanted to enter a trade based on a continuation of the AUD bull run, then you would put a stop order to enter at the 100% Fibo level at the top of the October 17th high. Your TP would be the next Fibo level, 161.8.
On the 27th October your trade would have been triggered and 31 October you would have hit the TP. Your SL should have been below the 100% Fibo, either 10 pips (if you were conservative) or half way to the 61.8 Fibo, or below the 61.8 Fibo if you were aggressive on the AUD bull run and wanted to give your trade room.
