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Fib Line First...Price Action Second

Fib Line First...Price Action Second

Richard Krivo, Trading Instructor

Instructor's Response:

You have the right idea on using Fibs lines. Wait for the retracement to take place and then when price action "stalls" at a Fib level, a trader can consider shorting the pair back in the direction of the Daily trend. And as you mention, using bearish candles or patterns at the Fib level would be added confirmation.
The Fib line you have drawn on the chart is valid. However, each of the tests that you suggest occur before the Fib line could have been drawn since the Swing Low (the end point of the Fib line) does not occur until after the "tests"...see the chart below.
chart 3 31 10
Going forward, as the Fib levels are valid, we can use them now in our trade analysis since any tests will take place after the Fib line is drawn.

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