Fibonacci Trading - Page 33

DailyFX Reports · #**481** (**permalink**) 10-09-2008, 12:08 PM

Wednesday, 08 October 2008 17:53:12 GMT
Written by Jamie Saettele, Senior Currency Strategist
Full Article

I wrote last week that “the next drop likely extends into the 130’s.” The EURJPY has reached the 100% extension of the 170-146.98 decline at 135.61. This level is just above the 38.2% of 88.87-170 at 132.70, which is the center of a former multi-year congestion area. This is a level that could produce a significant bounce.

Gregory McLeod · #**482** (**permalink**) 10-12-2008, 11:43 PM

It never ceases to amaze me how prices pivot and change direction at Fibonacci levels. Whether one believes in some mathematical phenomenon or or just a self fulfilling prophecy. GBP/JPY rallies up to the 38.2% retracement only to be turned around. Usually, when prices change direction at the 38.2% level, the extention move may exceed the 1.618 level of 165.34 to the 2.618 level. In the case of the GBP/JPY, price could reach 134.12 after a break of the 165.73 support level.

Gregory McLeod · #**483** (**permalink**) 10-16-2008, 08:21 AM

Aussie Dollar drops to new multi-year lows on the heels of a 733 point drop of the U.S. stock market which triggered Asian markets multi-year lows as well. Daily oscillators are oversold and a relief rally would give traders a better entry to sell this pair. However, a failure to rise to Fibonacci resistance would place us on alert to sell when price breaks below the .6314 level.

Gregory McLeod · #**484** (**permalink**) 10-17-2008, 12:02 AM

Though the Daily Trend remains down, oversold daily oscillators show that the trend may take a break allowing prices to move higher. Only time will tell if this retrace higher is only temporary or part of a larger trend reversal. Trend line resistance appears at .6505, the 61.8% Fibonacci resistance level of the .6956-. 5775 swing.
A short opportunity will be apparent when NZD/USD closes below .5775 or bounces down from the .6708-.6505 Fibonacci resistance zones. Trading in the direction of the retracement can be profitable but extremely risky and not recommended as the daily downtrend may reassert itself.

Gregory McLeod · #**485** (**permalink**) 10-19-2008, 09:15 PM

GBP/AUD has been in a strong up trend since its September breakout from a tight consolidation reaching a high of 2.7062 on October 8th. Fibonacci support begins at the 38.2% level near 2.4515, the 50% level at 2.3698 and the 61.8% support level comes in at 2.2882. For you Elliott wave fans, the daily chart looks to be consolidating in a complex wave 4 correction that is forming a pennant in an uptrend. Usually, pennants in up trends break to the upside. A measuring objective would take us into the 2.8000 area and beyond

Gregory McLeod · #**486** (**permalink**) 10-21-2008, 08:28 AM

The October 8th breakout at 1.5371 from a steep downward trend channel marks a possible trend reversal. EURCAD has run up to a high of 1.6131 before backing off slightly. We don't want to chase a runaway market. Rather, we want to wait for the market to come to us. We use Fibonacci to reveal possible hidden levels of support where we can join the trend with a low risk entry. After a huge run-ups patience is the best way to get involved with the trend. Look for support to come in between the 1.5595 and 1.5016 levels.

brad_1199 · #**487** (**permalink**) 10-23-2008, 02:45 AM

EURAUD is finding Fib Support At The 38.2 Level And has pulled back beautifully to the 20 day Moving Average in an easily defineable Up Trend offering Bulls an entry for a move to new highs over the next month or so...

There is also now a confirmed candlestick reversal signal at the FIB Level as well to bolster the bullish case..

Bulls All Aboard.. Down Side Risk Can Now Be Contained To 1.8870

Gregory McLeod · #**488** (**permalink**) 10-23-2008, 07:56 AM

Quote:

Originally Posted by brad_1199

EURAUD is finding Fib Support At The 38.2 Level And has pulled back beautifully to the 20 day Moving Average in an easily defineable Up Trend offering Bulls an entry for a move to new highs over the next month or so...

There is also now a confirmed candlestick reversal signal at the FIB Level as well to bolster the bullish case..

Bulls All Aboard.. Down Side Risk Can Now Be Contained To 1.8870

Looks good Brad!

Gregory McLeod · #**489** (**permalink**) 10-23-2008, 08:42 AM

We look for a continuation of the down trend upon a break out from a sideways rectangle consolidation. Price was rejected at the 38% Fibonacci level. The dramatic 100 basis point interest rate cut by the New Zealand central bank should drive NZDUSD lower as the interest rate differential between the US and NZ has been narrowed. Look for a closed, full bodied daily candle below the .5779 level before entry.

brad_1199 · #**490** (**permalink**) 10-23-2008, 04:23 PM

Quote:

Originally Posted by Gregory McLeod

Looks good Brad!

Thanks Greg :-) I think it looks pretty good too

It looks like today is leaving a bullish inverted Hammer on the FIB LEVEL to bolster the reveral scenario

Definately looking good for bulls.. I think there's a concrete stop level just below 1.8890.. Risk is fairly tight for long entry

Risk is defined. I don't think price can get back under 1.8974 but if it does 1.8890 should hold...

brad_1199 · #**491** (**permalink**) 10-24-2008, 03:15 AM

Just look at this pair go !!! Didn't take long to sky rocket !! VERY NICE !

YusuFX · #**492** (**permalink**) 10-26-2008, 04:35 AM

Bignatx · #**493** (**permalink**) 10-27-2008, 04:25 PM

Quote:

Originally Posted by brad_1199

Just look at this pair go !!! Didn't take long to sky rocket !! VERY NICE !

Very nice !

Bertie Stemp · #**494** (**permalink**) 10-29-2008, 08:36 PM

Hi there everyone.

I just have a couple of queries about the way people interpret fibonacci levels.

Are there any time frames on which you would say that fib levels are simply not as valid as say, a daily chart?

And what are the benefits of using more than 4 levels?

Thanks
Bertie

Gregory McLeod · #**495** (**permalink**) 10-30-2008, 10:42 AM

Quote:

Originally Posted by Bertie Stemp

Hi there everyone.

I just have a couple of queries about the way people interpret fibonacci levels.

Are there any time frames on which you would say that fib levels are simply not as valid as say, a daily chart?

And what are the benefits of using more than 4 levels?

Thanks
Bertie

Fibonacci values are valid on all time frames. However, very small time frames do not provide good money management opportunities. For example, if you trade on a 1 minute chart, fibonacci levels may not exceed the spread costs. So using a daily chart, 4 hour chart or 60 minute chart will give you levels in price that can provide good risk/reward opportunities.

In general, the longer the time frame, the less volatile a chart is as well and the more "reliable" support and resistance levels become. The most common Fibonacci levels are .382, .50, .618, .786.

There are also some not so common levels as 23.8, .707, .889.