How to apply Fibonacci retracements?

asimpleplan

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Hi, can anyone explain the logic of where to apply Fibonacci retracements?

On the ff chart I can see the Fibonacci retracement levels have been applied. In this case the bottom line is the low on the chart with the subsequent levels above.

What is the logic in applying the retracements from this low when if you scroll further back there'll be a lower low?

Is that how Fibonacci retracements work? They can be applied from any time period henceforth? Obviously on too small a timeframe they'll cease to be effective?
 
I couldn't post the chart in spite of trying 2 different image hosting sites where I successfully uploaded the image, copied the link to paste into the 'insert image' option on this site, but 'trade2win' can't deal with the process. I've used many forums across the web and many suffer similar issues but many are very easy to use where quite often I can just drag and drop an image on to a post and the site's software sorts out the rest. 2017 and still having this problem!
 
  1. Step 1 – Identify the direction of the market: uptrend.
  2. Step 2 – Attach the Fibonacci retracement tool on the bottom and drag it to the right, all the way to the top.
  3. Step 3 – Monitor the three potential support levels: 0.236, 0.382 and 0.618.
 
Fibonacci doesn't work studies prove it but the market does retrace usually with the random distribution around 60-80% you can get the free study here:

https://waverl,find yadvisors.com/research/
Fibs works fine, find a strategy that suits your time frame, trade extension's or retraces, works like all strategies, when your stop gets hit, start again as long as your win lose ratio is in your favour ,no worries,
 
Hi, can anyone explain the logic of where to apply Fibonacci retracements?

On the ff chart I can see the Fibonacci retracement levels have been applied. In this case the bottom line is the low on the chart with the subsequent levels above.

What is the logic in applying the retracements from this low when if you scroll further back there'll be a lower low?

Is that how Fibonacci retracements work? They can be applied from any time period henceforth? Obviously on too small a timeframe they'll cease to be effective?

If you're using them for following a trend (Which is what they work best with) the retracements will always be from the recent swing low to the recent swing high. The reason for this is simply because if all of the fibs on that swing are broken then the uptrend has, by definition, failed. An uptrend should be a series of higher highs and higher lows (Vice versa for a downtrend). When the local swings fail, this is when it is useful to draw a fib from the low to the high of the complete swing.

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Hi, can anyone explain the logic of where to apply Fibonacci retracements?

On the ff chart I can see the Fibonacci retracement levels have been applied. In this case the bottom line is the low on the chart with the subsequent levels above.

What is the logic in applying the retracements from this low when if you scroll further back there'll be a lower low?

Is that how Fibonacci retracements work? They can be applied from any time period henceforth? Obviously on too small a timeframe they'll cease to be effective?
draw it from the start of a bullish or bearish wave and after the wave is reversed, expect reactions to the Fibonacci levels.
 
Hi, can anyone explain the logic of where to apply Fibonacci retracements?

On the ff chart I can see the Fibonacci retracement levels have been applied. In this case the bottom line is the low on the chart with the subsequent levels above.

What is the logic in applying the retracements from this low when if you scroll further back there'll be a lower low?

Is that how Fibonacci retracements work? They can be applied from any time period henceforth? Obviously on too small a timeframe they'll cease to be effective?
Firstly what are you using Fibs for , Counter trend - breakouts - it all matters , and what Fib levels are you trying to use.?
 
Fibonacci in trading is a predictive indicator, where the others just tell you where you are on the chart and where you have been.
If you take a time frame, say 15 min on eurusd layer your fib indicator with levels ( i omitted some levels) i use 8 levels ,but i can use less.
watch closely what happens when the candles hit certain fib levels and the candles reaction, once you can see this happen over and over again
your are now on the way in building a strategy.
Chart pattern recognition is the key also, when to and when not to apply fibs ( ie not to trade)

Just my opinion.
 
Hi, can anyone explain the logic of where to apply Fibonacci retracements?

On the ff chart I can see the Fibonacci retracement levels have been applied. In this case the bottom line is the low on the chart with the subsequent levels above.

What is the logic in applying the retracements from this low when if you scroll further back there'll be a lower low?

Is that how Fibonacci retracements work? They can be applied from any time period henceforth? Obviously on too small a timeframe they'll cease to be effective?
To use Fibonacci as a retracement tool, it is important to choose your time frame and stick to it. Find a significant and strong move in either an upward or downward trend and apply the retracement tool as shown below:

technical chart showing fibonacci retracement

I tend to stick to simplifying the indicator and only using the Golden Ration as shown on the screenshot, but in reality the broker software will have options to include additional ratio's that suit the traders needs. By way of example, other levels sought by prices include 23.6%, 38.2%, 50% and 76.4% but the technical indicator can be edited by the user as they see fit.

The above extract is a perfect example of the effectiveness of using Fibonacci retracement tools, it demonstrates how the indicator provides an easy to identify point of resistance at the 0.618 ratio before resuming the downtrend. If a short position is to be entered at the 0.618 resistance level, it would be good practice to set a stop loss order just above entry.

The logic is that after a strong move, there will always be a retracement, as prices can't continue in the same direction. The retracement tools allows traders to either trade the retracement, or wait until it has ended and continue trading the longer term trend.
 
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