Hi everyone. I have a question concerning Trend and Fib Retracements, It´s a bit long. Here it goes:
For my trend question, you need to imagine or if you can, take a look at the Daily GBP/NZD chart: Well from mid August to January it was trending down and from there (January) it started trending up till mid march, when it started trending down again. The whole chart from august till april despite trending up some months and down some others, looks as if it´s ranging. Now my question is: The times it was trending up, Is it right if I go to a shorter time frame (1 hour chart) and trade in the direction of the Longer time frame (Daily) that at that time was trending down? The second question is: Do I have to wait until the shorter time frame is trending in the same direction of the longer time frame, or I can enter the trade as soon as I see that the shorter time frame is changing to the direction of the Longer time frame?
My last question is: In this case, how do I measure Fibonacci retracements, there are so many peaks and valleys and the overall trend also seems to be ranging. Also, Do I have to measure the Fib levels on both the short and Long term time frames to find an entry point?
I hope that you can help me on this one. If you didn´t really get what I just said or have the idea and want to help me with this issue, please feel free to post or contact me.
P.S My trading technique is based on the Multiple time frame technique mentioned on the Ed Ponsi book Forex Patterns and probabilities
Hi,
Well I cannot comment on GBP/NZD in particular. There are two schools of thought on the subject i.e. some will insist that staying in one timeframe is the correct way to do things while others will say to take trades on the shorter timeframes only in the direction of the (longer) major trend. (I myeself stay in one timeframe and at best will sometimes change to a lower timeframe simply to trail aggressively trail a profitable stop).
Regarding Fibs:
Below is a thread I started not too long ago.
http://forums.babypips.com/newbie-island/38619-fibonacci-numbers-their-application-trend-analysis.html
I don’t use Fibs on their own but only as a confirmation for signals generated by certain on my trading systems. The problem wih Fibs is FROM where TO where to draw them. I ‘loosely’ draw them from the most recent swing high to the most recent swing low and, depending on how ‘sure’ I want to be on the trade, I may draw them on multiple timeframes and see if I have a confluence of Fibs on my trading timeframe (also know as Fibonacci Clusters). These are pretty solid levels to indicate support or resistance.
I realise that the above may not be QUITE as detailed and exact a reponse at you’d like to have received but it may give you some idea.
Regards,
Dale.
I think most people ascribe to using three time-fames; the one traded, and a higher one for analysis/signals, and a lower for tight entries. For instance, as a swing-trader I might use the mn1 or d1 Time-Frames for analyzing the general trend. Then be watching the h4 four times in a day for actual trading suited to my style. When a new trend starts out visibly on h4 then I would go to h1 to look for the best entry (London open and a bounce on session/daily high/lows in my direction). But i have heard mentioned that having the same indicator(s) on all three TF’s yields conflicting signals too often?
The main reason I make the post is for Fibonacci. Now, I know not to express highly-opinionated views on a Friday night but I must say, the most accurate way of using fibs lies in the Elliot-Wave Theory. But not many guys are actually inclined to climb the steep learning curve. With fibo, EWT becomes a [U]prediction[/U] tool with pre-planned entries and targets, and failure-correction mechanism. But I wont say.
http://irinaclimbs.com/Books/Fibo-Ebook-Part1.pdf : might as well be “Advanced Fibonacci Applications”
Ultimate technical Analysis pdf: from actionforex.cm but available here With two fibs chapters, and a transition mechanism from indis to EW. Heheh
The other fibo thread with a post I dont want to repeat : not cool recycling old threads, but please understand, its a long post only achievable on a Sunday night (with inspiration, not gaso).
If you want an introductory course on the EWT, google “10 lessons In Elliotwave Theory” on actionforex. Available in pdf, be sure to check out other complimentary ebooks and analysis there. Best resourse for these things.
Might post an further illustration with currently traded charts/targets, later. Happy Easter y’all.