Illustration - Fibonacci (I)
Wh cashback forex cashbackforexreview How Forex Rebates Work? In our trading process, we will use Fibonacci ratios extensively, so youd better learn about it premiumrebateforex love it as much as you love your mothers cooking Fibonacci is a very broad subject and there are already numerous fields of study about Fibonacci, but we will start our study in two areas: Fibonacci retracement and Fibonacci extension. Mr. Fibonacci - Leonardo Fibonacci He was not some well-known chef, in fact, he was a famous Italian mathematician He was the first person in the West to study the Fibonacci numbers and to introduce the modern system of writing place value representations of numbers and multipliers into Europe The most basic formula of the golden mean is the division of 1 into 0.618 and 0.382 They have some characteristics as follows: (1) any number in the series is composed of the sum of the first two numbers; (2) the ratio of the former number to the latter number, tends to a fixed constant, HowForexRebatesWork is, 0.618; (3) the ratio of the latter number to the former number, tends to 1.618; (4) 1.618 and 0.618 are reciprocal, the product of which is approximately equal to 1; (5) any number If compared to the last two numbers, the value converges to 2.618; if compared to the first two numbers, the value converges to 0.382 Fibonacci retracement bestforexrebaterates are: 0.236, 0.382, 0.500, 0.618, 0.764 Fibonacci extension levels are: 0, 0.382, 0.618, 1.000, 1.382, 1.618 traders use Fibonacci retracement levels Given that so many traders are looking at these levels and setting buy or sell orders near them to enter trades or set stops, support and resistance levels have become self-fulfilling fables traders are also using Fibonacci extensions as take back levels and like Fibonacci retracement levels, there are also a large number of traders looking at Fibonacci extensions and using these In order to use Fibonacci levels as our analysis tool in a graph, we must first clarify that we have two candles that have a swing high and a swing low within a given range. A candlestick with a band high is a candlestick that has at least two candles with a higher high than the high of the candlestick on the left and right side of the candlestick. Dont worry, we will explain in detail retracements, extensions, and more importantly, we will cover in some lessons how to use the Fibonacci tool to take advantage of Fibonacci retracements. When the market is in a downtrend, it is best to go short or sell when the market retraces to the Fibonacci resistance level In order to find these retracement levels, you must first find the nearest band high and band low Then, for downtrends, select the Fibonacci charting tool, click with the mouse on the recent band high and drag the mouse to the nearest band low For uptrends, the charting process is the opposite of that for downtrends The process is the opposite of a downtrend, got it? Now, lets look at some specific examples of how to use Fibonacci retracement levels in the market for uptrends The chart below is the daily chart of AUD/USD: First, click with your mouse on the April 20 swing low of 0.6955 and drag it to the June 3 swing high of 0.8264. The software will automatically show you the Fibonacci retracement level you drew as shown above. 0.7955 (23.6%), 0.7764 (38.2%), 0.7609 (50.0%), 0.7454 (61.8%) and 0.7263 (76.4%) Now, the market expects that if AUD/USD retraces from its recent highs, the exchange rate will be supported at one of the Fibonacci retracement levels because, as the exchange rate retreats, traders will place buy orders Now, lets look at what happened after the pair reached its swing high: After the AUD/USD retraced below the 23.6% Fibonacci retracement, the pair continued to fall in the coming weeks and even tested the 38.2% retracement, but eventually struggled to close below it. Now, lets see how to use the Fibonacci retracement tool in a downtrend. The chart below shows the 4-hour chart of EUR/USD: the swing high was seen at the January 26 high of 1.4195, and the swing low was seen a few days later at the daily low of 1.3854 hit on February 2. ), 1.3983 (38.2%), 1.4023 (50.0%), 1.4064 (61.8%) and 1.4114 (76.4%) The markets expectation for a downtrend is that if the exchange rate retraces from the 1.3854 swing low, it will be blocked at one of the Fibonacci levels as traders will place sell orders at the aforementioned price levels Lets see what happens next What happens next? Is the EUR/USD trend perfect? The exchange rate first tries to rally, briefly hitting resistance at the 38.2% Fibonacci retracement level and then rallying further to test the 50% retracement level If you set some sell orders at the 38.2% or 50% Fibonacci retracement level, then you will take profits as a result From the two examples above we can see that the exchange rate gets brief support or resistance at the Fibonacci retracement level because almost all of you are using Fibonacci tools, these levels will become self-fulfilling resistance and support levels but, one thing you must remember is that prices do not always rally from these levels and you must be alert to some possible "dead zones" which we will explain to you in detail later. If they were so simple to use, traders would always place their orders at Fibonacci levels and the market would always continue trending In the next lesson, we will show you what happens when Fibonacci levels fail Fibonacci application fails Review the previous knowledge when we said that support and resistance levels will eventually be broken from how to use Fibonacci levels to find support and resistance levels Now, lets look at an example of what happens when a Fibonacci retracement fails: The chart below is the 4-hour chart of GBP/USD: you see that GBP/USD is already in a downtrend, so you are going to use the Fibonacci tool to help you set a good entry point. See that the subsequent candles in GBP/USD stalled at the 50% Fibonacci retracement level so you start saying to yourself, "Very good, the currency pair has stabilized at the 50.0% retracement level, now its time to go short!" You then went short GBP/USD at the market price and therefore started to take it for granted that you would make a big profit this time Now, if you do set up a sell order at the 50% retracement level, this will not only shatter your dreams, but also wipe out your account if you dont manage your risk controls Lets see what happens afterwards? The results show that the swing low became the bottom of the previous downtrend and the market began to rally through the previous swing high What lesson does this lesson teach us? Although Fibonacci levels make your order making success rate much higher, like other technical analysis tools, they are not always so effective in the use of Fibonacci tools, another common problem is that the selection of swing highs and swing lows investors will have differences in the graphs they choose when making a trade, and the time periods they choose will be different, as well as their own fundamental views Most likely, Zhang San At the very least, you should keep in mind that there is no absolute right way to trade Forex, especially when the trend of the graph is not very clear. In the next lesson, we will show you how to use Fibonacci tools in conjunction with other forms of support, resistance and candle patterns How to use Fibonacci and trendlines together Another tool that is used in conjunction with Fibonacci tools is trendline analysis After all, Fibonacci levels are most effective when the market is trending, so this is a much better guide for trading Remember, no matter Remember, whenever prices are in a downtrend or uptrend, traders can use Fibonacci retracement levels as an aid to entering the market in a trend The chart below shows the hourly chart of AUD/JPY. Even if this is just a short-term trade I think Ill buy when the exchange rate tests the trend line again" But before you plan to enter, why not open your Forex toolbox and pull out the Fibonacci tool? Lets see if we can enter at a more precise entry point. We selected the swing low at 82.61 and the swing high at 83.84 and used the Fibonacci tool to draw the corresponding Fibonacci retracement levels. There is only one way to find out you guessed it? The AUD/JPY held at the 61.8% Fibonacci retracement level, where the pair rallied and then moved higher again. If you set some orders at this level, you would have found the perfect entry point. Hours after the AUD/JPY tested the trend line, the pair powered up and then broke above the swing high. As you can see, the Fibonacci tool is really worth using, even if you are planning to enter when the exchange rate tests an uptrend line again. The combination of diagonal and linear support or resistance levels may mean that other traders are also looking at these levels, but it is important to note that, like other charting tools, how to draw a trend line is quite subjective and you cant give exact instructions on how to draw it. You cant tell exactly how other traders are drawing trend lines, but you can know one thing - there is a trend. If you see a trend going on, you should find ways to get a better chance of making a profit. However, there are ways to reduce the chances of failing to use the Fibonacci tool. Although the Fibonacci tool is very useful, you should not only use this tool to make a strategy. In this lesson, lets review what youve learned so far and combine it with what youve learned to help you make profitable trades. Lets get started right now! One of the best ways to do this is to use the Fibonacci tool to mark potential support and resistance levels and see if they align with the Fibonacci retracement levels. If the Fibonacci levels are already resistance and support levels and you use them in conjunction with some other price areas that are also closely watched by other traders, then the chances of a price rally from these areas are greatly increased. Lets look at an example of how to use Fibonacci levels in combination with support and resistance levels: The chart below shows the daily chart of USD/CHF: As the chart shows, USD/CHF has recently been in an uptrend and you therefore intend to take advantage of the current trend in USD/CHF to place an order but the question is, when should you enter? So you start using the Fibonacci tool and select the January 11 low of 1.0132 and the February 19 high of 1.0899 as the swing lows and highs for the currency pair Now, with all these Fibonacci levels deconstructed, your graphs look pretty fantastic Now that we have a framework to enhance our ability to find stable entry points, we are now able to answer the question "Where should you enter? Now that we have a framework to enhance our ability to find stable entry points, we are now able to answer the question "where should you enter at" You look back at the past movement of the currency and you see that 1.0510 was a good resistance level in the past and that level coincides with the 50% Fibonacci level. If you place a buy order near the 50% Fibonacci level, youll be celebrating a lot for it. The USD/CHF trend went through some tighter moments, especially when the currency tested support for the second time on April 1, when it tried to break below the level, but ultimately failed to close below it. The point of the trading model is that you should pick price levels that have acted as resistance or support in the past and if you can take this into account, then the chances of price rallying from these levels will be much higher Why? First, as we discussed in the first year course, previous resistance or support levels will be good areas to buy or sell because other traders will also be watching these areas closely Second, we already know that many other traders are also using the Fibonacci tool and they are always ready to enter at these Fibonacci levels Since traders are watching the same support and resistance levels, the number of orders at these levels is bound to increase. Although this does not guarantee that prices will rally from these areas, at least you will be more confident in your trading. Remember, trading is always about probability. If you can take advantage of high winning trades, your chances of winning in the long run will be much higher.