Fibonacci Trading - Page 4

Gregory McLeod · #46 (**permalink**) 01-30-2008, 02:54 PM

As the Bernanke and company have cut rates an additional 50 basis points to head off the growing signs of recession. The Dow and EUR/JPY have taken a dive.

As more liquidity is pumped into market, risk aversion may subside opening the door to investors moving back into equities at these depressed levels.

The EUR/JPY has a strong correlation with the Dow Jones Industrial average. Both have moved up strongly from sharp bottoms and retraced to fib levels.

See the attached chart

Blaiserboy · #47 (**permalink**) 01-31-2008, 02:02 AM

you may wish to observe .786 also......

Some traders assume that a target on a retrace will be within that area between .618 and .786...

Depending on the instrument you trade, you may find that by doing a statistical analysis, there is a predominant ratio on retrace...

A lot of work with rations is, to a degree, subjective, and the best results are obtained by doing a lot of observation, trial and error, and statistics. Your own experience is going to show you your answers.

I will be interested in seeing other opinions....

Gregory McLeod · #48 (**permalink**) 01-31-2008, 06:58 AM

Quote:

Originally Posted by adili

Hi, I'm new to this forum. But this lately I found that this fibo is quite useful and very effective during non-news hours. But, is there any tips/strategy what is the rule of thumb for the retracement level, because at my chart, it can retrace at any level 38, 50 and 61%. I'm using both 1 hr and 5min for entry.

Hello, Adili. Welcome to the forum. One thing you will find out about fibs as well as with other forms of support and resistance is that the longer the time frame, the more reliable those levels are. On Daily charts, each candlestick has 288 times the data as 1 five minute candle.

Trading in the direction of the Daily trend off of 4 hour or 1 hour charts, will put the odds in your favor.

Hope that helps. Thanks for your post.

Gregory McLeod · #49 (**permalink**) 01-31-2008, 07:03 AM

Quote:

Originally Posted by Blaiserboy

you may wish to observe .786 also......

Some traders assume that a target on a retrace will be within that area between .618 and .786...

Depending on the instrument you trade, you may find that by doing a statistical analysis, there is a predominant ratio on retrace...

A lot of work with rations is, to a degree, subjective, and the best results are obtained by doing a lot of observation, trial and error, and statistics. Your own experience is going to show you your answers.

I will be interested in seeing other opinions....

I agree with you that the .786 fibonacci level popularized by Larry Pesavento needs to be included in any meaningful analysis of fibs. On many charting packages, the 78.6% level is not the default value and has to be added.

Frequently, you will observe price bouncing from a 78.6% retracement and heading up to a 127% extension target falling short of the traditional 161.8% target.

Also, some traders are quick to call a trend reversal once the 61.8% level is exceeded only to be caught off guard when price "mysteriously" rebounds from some 'hidden' level of support.

Thanks for your post!

Blaiserboy · #50 (**permalink**) 01-31-2008, 07:22 AM

I think I have made that mistake a few times.lol

In fact, I have made most of them.... and paid...

However, the experiences have taught me some caution and money management.....

This board has some excellent posters...... some excellent advice......

Gregory McLeod · #51 (**permalink**) 01-31-2008, 07:26 AM

Quote:

Originally Posted by Blaiserboy

I think I have made that mistake a few times.lol

In fact, I have made most of them.... and paid...

However, the experiences have taught me some caution and money management.....

This board has some excellent posters...... some excellent advice......

Yes, I have paid my share of 'tuition' too.

You are included in that group of posters so please continue to share.

Blaiserboy · #52 (**permalink**) 01-31-2008, 06:47 PM

Interesting how this moved up so far from the.382.

I am thinking that a downtrend is in place as there seems to be a lower high after the uptrend.... however, the market will let me know.! lol

I base my idea of a downtrend based on the equal highs.

Does someone have a comment.?

Blaiserboy · #53 (**permalink**) 01-31-2008, 07:09 PM

This chart is pretty small, just to illustrate something...

I thought it interesting that .382 is so prominent on both of these....

Gregory McLeod · #54 (**permalink**) 02-01-2008, 06:11 AM

Quote:

Originally Posted by Blaiserboy

Interesting how this moved up so far from the.382.

I am thinking that a downtrend is in place as there seems to be a lower high after the uptrend.... however, the market will let me know.! lol

I base my idea of a downtrend based on the equal highs.

Does someone have a comment.?

Those are nice charts. Thanks for posting them.

That looks like a pretty aggressive bounce from the .382 retracement. AUD/USD looks positioned to take out the old high very soon.

The daily trend is up and we tested the 50% Fibo on the daily as well. That long wick indicates good buying because price did not stay there too long.

AUD/USD looks to be breaking out of a consolidation triangle bounded by the red downward trend line (Supply line) and the green upward trend line (Demand Line). The breakout shows the imbalance between supply and demand in favor of demand. We could see .9400 to 1.000 in AUD/USD.

That's my 2 pips. Any other opinions are very welcome.

Gregory McLeod · #55 (**permalink**) 02-04-2008, 03:21 PM

GBP/USD has been in a down trend channel since November of last year. The bursting of their housing bubble is bringing the UK economy to recession's doorstep.

But higher food and energy prices raise the spector of inflation. Caught between the proverbial "rock and a hard place" The Bank of England is faced with the greatest economic challenge since 1992. Raising rates to head off inflation or lowering rates to sustain growth.

Technically, GBP/USD has rebounded to the 50% Fibonacci retracement of the 4 hr chart swing from the 1.9941 high to the 1.9625 low.

We are also sitting on the 23.6% Fibonacci retracement on the Daily chart 2.1164 swing high to the 1.9346 swing low.

With the Bank of England decision just 3 days away, expect some sideways movement going into the announcement on February 7th at 8:00 am New York time.

Blaiserboy · #56 (**permalink**) 02-04-2008, 03:41 PM

Does your method include only these time frames......

What would be the duration of your trades.... a few days I would think.....

What would be your entry trigger.... only the break of support...?

I am accustomed to using some oscillators and recognize that there is another way... hence the barrage of questions.....

Thanks

Gregory McLeod · #57 (**permalink**) 02-04-2008, 05:30 PM

Quote:

Originally Posted by Blaiserboy

Does your method include only these time frames......

What would be the duration of your trades.... a few days I would think.....

What would be your entry trigger.... only the break of support...?

I am accustomed to using some oscillators and recognize that there is another way... hence the barrage of questions.....

Thanks

Using longer time frames gives better risk/reward ratios and reduces the risk of being stopped out prematurely by random market noise.

A 1 hour chart with 40 days of data displayed is the lowest time frame that I would consult.
Typically a week to 10 days, depending on market volatility.

A closing candle near support provides the best risk to reward. A break of a trendline with a closing (full bodied) candle (not doji).

Oscillators provide excellent signals in the direction of the Daily trend.

See the attached examples

Blaiserboy · #58 (**permalink**) 02-04-2008, 06:03 PM

Thanks for that lesson......!

Gregory McLeod · #59 (**permalink**) 02-04-2008, 06:06 PM

Quote:

Originally Posted by Blaiserboy

Thanks for that lesson......!

That one is 'on the house'. You are very welcome.

Thanks for your participation.

Blaiserboy · #60 (**permalink**) 02-04-2008, 06:38 PM

the system that I use is based on oscillators, mainly stochastics... it seems to support your approach.

I have not been in the habit of making an entry on a daily chart, my trades are usually cleaned off before I close my charts.... however, I get to pay spread a lot more than you do...lol

I have marked up this chart a bit.. and I am posting it so that others may see confluence with your approach.....

To me.... there is a trade entry just about available and it could be a nice ride down .

From what I see there is a bit of resistance at 1.478 and once that is breached the time to enter is at hand....