It may be longer but I would be looking for a reversal around that fib yes.
If it makes a lower low or two. Could also be the completion of a C in the Elliot Wave structure, but that’s pretty subjective and not as clear as other formations I have seen.
I am not a huge Elliot Wave guy, as I focus on current price movement and Fib, but I will watch for the basic Elliot Wave structure to help confirm if it exists.
You have to register but I found a pretty basic Elliot Wave Video Here:
Although I closed for the long weekend the yen has hit the target area that I indicated.
Based upon my system I will also be watching for a large short trade in the EUR/USD during either the14th or 15th London market hours and if and when it reaches the 1.3450 area upon reversal confirmation.
An earlier retracement from today’s upward movement back down to the 1.3314 area my also be traded once movement downward is confirmed.
My stop loss is determined by where I know that I was incorrect, So it is chosen by the price structure itself. In most cases it is around 30-to 50 pips, and I then trade the lot value that corresponds to my money management formulas for the percentage of equity I allow myself to lose.
Stop Losses closer than 30 in my opinion are targets for crooked brokers, another reason I don’t believe in scalping with most of them.
The beauty of Elliot Wave theory is that it is fractal in nature and can be seen on any time frame, however I am always aware of the larger Elliot wave structures when analyzing the smaller ones.
Elliot Wave aside, human psychology tends to cause the markets to surge in three waves, with two pullbacks. This is what the theory is based upon, however, you can over complicate it by going to deep into the variations in my opinion.
Fibs are “very” important in determining where price will come back to from impulse waves.
I have a few secrets I use in conjunction with these basic approaches that act as filters to improve my winning percentages but this should get you started.
As I become friends with more people on here, I may share some things in private messages to those who show a genuine interest.
Let me stress also, you will still lose, that is a market reality, but a hell of a lot less.
That channel indicator is OK, I’ve seen it before, but I am not really a huge indicator guy. I really don’t think you need anything other than price as a line on your chart (assuming you can add in high and low lines at will), and your Fib retracements. If you need to you can label your impulse waves, but even that is overkill, because they are pretty easy to see once you are used to it.
On way timeframe? The one I trade with? A higher timeframe? For exemple if I trade the 5mins TF, should I set my fib on it or should I use 15mins or even 30mins TF?
I don’t know… How do you use it? When and where are you setting it while using your method?
I use mine as a retracement measurement tool, and also use the percentages to estimate impulse/pull back waves in a trend.
It is assumed that the market moves in 3 impulse waves and 2 pullback waves.
Wave 1 starts at a former top or bottom or out of the consolidation of a prior move (sideways market)
Wave 2 is approximately .786 of Wave 1
Wave 3 is usually the longest wave and is approximately Wave 1 X 1.1618
Wave 4 is approximately .382 of Wave 3
Wave 5 is approximately the same as Wave 1
These are Fib percentages.
Once you have seen Wave 5 form to the approximate size of Wave 1
You should be looking for a turn, you can draw your fib when you see the market complete wave 5, from the start of Wave 1 to the end of Wave 5 for your horizontal Fib retracement levels.
This works on all time frames.
However, although shorter time frames offer more opportunities to trade these formations, your spread becomes a greater percentage of your trade potential and can truly hurt your ability to increase equity. Not to mention if your broker is less than honest, as many are, you can be easily stop hunted.
It should also be noted that on shorter time frames you will win less as well.
I do not recommend trading less than the 15 minute chart.
What a great thread! While I may not have much to add your sharing of thoughts is certainly getting me in the right direction of better understanding fibs.
Hi Mister7, Like your thread
I trade in a similar way… major support/resistance
eur/usd
Been live only about 3 weeks but have been doing ok
look forward to more post from you
You think that the Euro is at the end of vawe 5 and is making some higher highs.
In addition there is a support in the 1.2950 zone and we are at the 61.8 fib of the last swing high…
