Fibonacci Retracements

[TheWolf]

Does anyone use fibs? Can you offer me any tips on it? I know that prices often turn at around 50%, and that's about it. How well does it work on 5 minutes chart? The 'rough to peak' wave, should it be the most recent wave used? Is it better to use fibs on bigger waves?

 

[Jetheat]

Lots of people use fibs.

50% is not the only major level.
Amongst the most used are the 38.2% level, the 50% level and the 61.8% level.

You can use it on a 5 min chart but it's better to use it on a larger time frame as it holds more weight.

You normally draw the fib from the most recent high to low or vice versa.

On the charts below, the 76.4% level should be 78.6 %.

 

[TheWolf]

Thanks! How about Fibonnaci fans? Which one is better to use?

 

[Jetheat]

Thanks! How about Fibonnaci fans? Which one is better to use?

They are just another way of drawing fibs. Some prefer one over the other.

The better way to use them is to plot the fib fan along with the regular fib and where they intersect, use those points as potential reversal points.
JH

 

[TheBramble]

It's interesting that the 50% level so often gets included as a Fib - it's not. However, price action often occurs at that 'level' as if it were.

Makes you wonder if there's some other mechanism to account for all this, doesn't it?

 

[Jetheat]

I originally came across the 50% level with Ken Roberts (a decade ago),
ever heard of him?

 

[TheBramble]

I originally came across the 50% level with Ken Roberts (a decade ago),
ever heard of him?

Indeed. Cut my commodity trading teeth (before they got kicked in) with good old Ken.

But the 50% level has been 'around' a lot longer than that. I really doesn't matter that it technically isn't a Fib. The fact that it does function like a Fib level means it may as well from a trading perspective. In the natural world, the 50% Fib level does not exist.

 

[TheWolf]

They are just another way of drawing fibs. Some prefer one over the other.

The better way to use them is to plot the fib fan along with the regular fib and where they intersect, use those points as potential reversal points.
JH

Sometimes, it the actual trend line doesnt hit the intersection points, but if the trend line is pretty close to the intersection is that ok (to short/long)?

 

[Jetheat]

That depends on the situation and the price action. Hard to say without a chart example.

JH

 

[FetteredChinos]

surely 50% is a fib?

1,1,2 ,3?

1/2?

fc

 

[TheBramble]

surely 50% is a fib?

1,1,2 ,3?

1/2?

uh?

 

[Straybow]

The Fibonacci Series is not the same as the Fibonacci Ratios. Same mathematician, different math.

Jetheat, I notice that for both screenshots you posted the large move charted has a distinct high/low pair within it. How do you decide when you've reached a "real" high or low? If I'd been in that market I would have thought the Pound was through after a 200 pip move on Friday but it moves almost as much Sunday night.

 

[Jetheat]

I suppose it depends on what TF you use.

It may be a good idea to draw a fib on a smaller timeframe as well as a larger timeframe. That way, when the move on the smaller fib has been completed, you can think about the target on the larger TF.

Does this make sense?

 

[TheWolf]

I tend to draw a fib fan for larger time frames, whereas fib retractments for shorter time frames.

 

[johyman]

uh?

Hi,
I have been Daytrading for 3 years and have really gotten an education....I changed to the Moving Average Strategy back in August and had more success, but was looking for something to confirm what I was doing...I think Fibonacci is the answer and I need to learn some other things about it that only someone who uses it would know...

Thanks John

 

[TheBramble]

Hi,
I have been Daytrading for 3 years and have really gotten an education....I changed to the Moving Average Strategy back in August and had more success, but was looking for something to confirm what I was doing...I think Fibonacci is the answer and I need to learn some other things about it that only someone who uses it would know...

Thanks John

Quotes a post from almost 4 years ago and quite magnificently out of context.

Is you a bot? Is you?

Let's try again.

Uh?

See you in Feb 2013