How to use Fibonacci ?
- Thread starter kike
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You find a trend or a wave of a trend and draw Fibonacci from top (0 to 100) for bullish trend and from bottom (0 to 100) for bearish trend.
Fibo retracement is to measure retracement, so what I look for is a candle that shows at a level a sign of tiredness. I look for something like a pinbar, a fake out, an inside bar (and break), a morning star and whatever suggests tiredness, like a congestion forming above or below a fib level. I think further indicators like the listed oscillators might not be necessary. But don't take my word for it, I really don't like oscillators except when I do M5 scalping that involves MACD.
I use the 38.2% and 61.8% levels. I use the area bounded by these 2 levels for additional confirmation, in conjunction with a trend line and horizontal S/R. If price is in a trend, I look for it to retrace to an area where there is a confluence of these elements. I then look for a candle pattern to signal a trade in the direction of the trend.
All the other posts have been spot on Kike, also keep in mind that your trying to capture the momentum of all of the other Fib traders out there. So as you are viewing your charts try to think where all of the other fib traders would have their fibs drawn. The more obvious the better in my opinion.
This is why, in my opinion, Fibonacci levels "work". It's a self-fulfilling prophecy.
Hi Kike,
I posted this before but I will post here to help you.
You can use fibo in this way. A wave is between values 0 and 100 fibo and any wave has a correction.
The minimum level for a corrective way (to be calculated as correction and to consider that the wave made his correction is 61.8 fibo). The maximum level accepted for correction of the wave is 38.2.
If it bounces back from those levels we can trade as follows: stop loss under the level of the correction ,and target is next fibo level, namely 100
I will attach a chart to show you an example.
http://screencast.com/t/I7GuPFtE3N
So this is a fibo wave and this is how professional traders use it.
If the correction goes below 38.2 and hit 23.6 the correction becomes a wave and we set fibo in the opposite direction, with 100 down and 0 up.
It's a simple and good way of trading, but not many know about.
Kathia
I posted this before but I will post here to help you.
You can use fibo in this way. A wave is between values 0 and 100 fibo and any wave has a correction.
The minimum level for a corrective way (to be calculated as correction and to consider that the wave made his correction is 61.8 fibo). The maximum level accepted for correction of the wave is 38.2.
If it bounces back from those levels we can trade as follows: stop loss under the level of the correction ,and target is next fibo level, namely 100
I will attach a chart to show you an example.
http://screencast.com/t/I7GuPFtE3N
So this is a fibo wave and this is how professional traders use it.
If the correction goes below 38.2 and hit 23.6 the correction becomes a wave and we set fibo in the opposite direction, with 100 down and 0 up.
It's a simple and good way of trading, but not many know about.
Kathia
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