We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Mixed
USD/JPY
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bullish
Oil - US Crude
Bearish
Bitcoin
Bearish
More View more
Real Time News
  • CHF Swiss Sep M3 Money Supply YY Actual: 2.6% Previous: 2.7%
  • Yet more #Brexit delay keeps gold underpinned, charts suggest it could gain but fundamental risk appetite will probably decide that. #Crudeoil prices sink on worries about oversupply. https://www.dailyfx.com/forex/market_alert/2019/10/21/Gold-Prices-Find-Support-In-Brexit-Turmoil-US-China-Trade-Uncertainty.html?utm_source=Twitter&utm_medium=Cottle&utm_campaign=twr
  • Join @DavidCottleFX 's #webinar at 4:00 AM ET/8:00 AM GMT for your weekly update on the top Asia Pacific market drivers that traders should watch this week. Register here: https://t.co/HNf3Axw8s5 https://t.co/xApzkcobSR
  • Indices Update: As of 07:00, these are your best and worst performers based on the London trading schedule: US 500: 0.23% Wall Street: 0.20% Germany 30: 0.08% France 40: -0.03% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/fupnm3hipk
  • European Opening Calls from IG: #FTSE 7165 +0.20% #DAX 12666 +0.26% #CAC 5646 +0.18% #MIB 22387 +0.29% #IBEX 9348 +0.20% #STOXX 3588 +0.23% #SA40 49591 +0.16%
  • EUR Germany Sep PPI MM: Actual: 0.1% Forecast: -0.1% Previous: -0.5% YY Actual: -0.1% Forecast: -0.2% Previous: 0.3%
  • Markets believe that the European Central Bank @ecb will ease policy this year. This could be very bad news for the Swiss National Bank, but it’s not clear that it will resort to old remedies. Get your market update from @DavidCottleFX here: https://t.co/jZV0Ytw6Db https://t.co/KXULyswial
  • Japan’s All Industry Activity Index (MoM) (AUG) Actual: 0.0% Est: 0.1% Previous: 0.2% #JPY
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.04%, while traders in Germany 30 are at opposite extremes with 78.78%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/cCfWKn4CzA
  • (ASEAN Fundamental Forecast) US Dollar Outlook: MYR, SGD May Fall on CPI. Rupiah to Drop on Cut? #USD $USDMYR $USDSGD $USDIDR - https://www.dailyfx.com/forex/fundamental/article/special_report/2019/10/21/US-Dollar-Outlook-MYR-SGD-May-Fall-on-CPI-Rupiah-to-Drop-on-Cut.html?CHID=9&QPID=917702 https://t.co/3u9AfXqbeN
Learn Forex: Timing Trades with Fibonacci Retracements

Learn Forex: Timing Trades with Fibonacci Retracements

2012-11-28 19:00:00
Walker England, Trading Instructor,
Share:

When studying technical analysis many traders come across a variety of methods for determining support and resistance. One of the most used methods for finding these pricing levels includes Fibonacci retracements. These retracements can be found using by using the” insert” feature found inside most charting packages. From here, Fibonacci retracement lines can be drawn by measuring the distance between an established swing high and low in a trending market.

Below we can see Fibonacci retracements at work on a XAUUSD (Gold) daily chart. The Fibonacci retracements are measured by finding the distance between the daily high at $1,795.80 and the low at $1,672.50. Traditionally traders look for price to move towards the 23.6%, 38.2%, 50%, 61.8% and 78.6% levels for trading. Currently in our example, price has retraced as much as 61.8% of our initial decline. Traders watching this level for resistance can then move to employ the strategy of their choosing.

Learn Forex: Timing Trades with Fibonacci Retracements

It is important to remember that Fibonacci retracements can be used on a variety of charts as well as time frames. Once retracement levels are found, these technical points lend themselves to potentially trade a swing back in the direction of the primary trend. Traders can place entries near the Fibonacci retracements themselves, but more often than not Fibonnacci retracements can be used in conjuncture with other technical indicators.

Below we can again see our XAUUSD (Gold) Daily chart, this time including the MACD indicator. Traders will employ MACD to find out if momentum is returning lower, once price has found resistance near a Fibonacci retracement. Once a signal is confirmed, traders can plan to enter the market using market orders while limiting their risk using a stop above resistance established at the 61.8% retracement value.

Learn Forex: Timing Trades with Fibonacci Retracements

Finally Fibonacci retracements can be useful in a breakout scenario. If prices continue to break out to higher highs, this is an implication that prices may be reverting against the direction of the prior move. In the example below, breakout traders can look for price to move through resistance at the 78.6% retracement. At this point entry orders can be set as XAUUSD begins to create new market highs. In this example stops can be set below resistance in the event of a false breakout.

Learn Forex: Timing Trades with Fibonacci Retracements

Next: Trading the Pivot (8 of 47)

Previous: The Forces of Supply and Demand

---Written by Walker England, Trading Instructor

To contact Walker, email WEngland@DailyFX.com . Follow me on Twitter at @WEnglandFX.

To be added to Walker’s e-mail distribution list, CLICK HERE and enter in your email information.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.