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
Bullish
GBP/USD
Bullish
USD/JPY
Bearish
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
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
Oil - US Crude
Mixed
Bitcoin
Bearish
More View more
Real Time News
  • RT @Tony_Nyman: Morgan Stanley #FX trades of the week Buy NZD/CAD at market for 0.8800. Stop 0.8220 Sell THB/KRW at market for 37.0. Stop 3…
  • UK General Election - majority odds...h/t @Oddschecker #gbp #sterling @DailyFX https://t.co/lc6an3ErVW
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.57%, while traders in France 40 are at opposite extremes with 84.00%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/lCP80FZFD8
  • Commodities Update: As of 08:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 0.14% Gold: -0.53% Silver: -0.78% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/EGNbk1OlkQ
  • RT @TradeFloorAudio: UK Bookmaker Paddy Power cuts the odds of a Conservative Party majority at upcoming #GE2019 from 4/7 to 4/9 .... It ha…
  • Forex Update: As of 08:00, these are your best and worst performers based on the London trading schedule: 🇬🇧GBP: 0.41% 🇳🇿NZD: 0.12% 🇪🇺EUR: 0.09% 🇨🇭CHF: -0.02% 🇦🇺AUD: -0.02% 🇯🇵JPY: -0.17% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/0Z5fYqqkex
  • LIVE NOW: Join Market Analyst @DavidCottleFX for a look ahead at the major economic data which will drive Asia Pacific markets in the coming seven days. Register here: https://www.dailyfx.com/webinars/985612483?CHID=9&QPID=917720
  • Indices Update: As of 08:00, these are your best and worst performers based on the London trading schedule: Wall Street: 0.19% US 500: 0.17% Germany 30: 0.11% France 40: 0.07% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/GLPREk9GG5
  • Why financial market traders must monitor both monetary and fiscal policy?Find out from @MartinSEssex here: https://t.co/Fkzk88Y5gm https://t.co/BCtPSUCBO9
  • LIVE IN 30 MIN: Join Market Analyst @DavidCottleFX for a look ahead at the major economic data which will drive Asia Pacific markets in the coming seven days. Register here: https://www.dailyfx.com/webinars/985612483?CHID=9&QPID=917720
Fibonacci Fundamentals

Fibonacci Fundamentals

2011-04-27 02:15:00
Richard Krivo, Trading Instructor
Share:

Student's Question:What is the purpose of the Fibonacci Tool and how do you use it? Thanks.Instructor’s Response:The purpose of the Fibonacci Retracement Tool is to be able to make a determination as to how far a currency pair is likely to retrace after a strong move in either direction. This is helpful since it will allow us to make an entry decision so we know when to enter (or re-enter) a trade when the overall trend once again comes into play.Take a look at the chart below…

Fibonacci_Fundamentals_body_chart_4_27_11.png, Fibonacci Fundamentals

On this chart we see a long, bullish move to the upside of about 1000 pips. We would draw the Fib line (the red line) from the Swing Low (the lowest point of the move) to the Swing High (the highest point of the move). Our Fibonacci Tool then puts the Fib Levels on our chart.

If we are using the Fib Tool in a downtrend, we would do the opposite of the above. We would draw the Fib line from the Swing High of the move to the Swing Low.As is noted on the chart, when the pair retraces, it can likely retrace to one of these three levels: 38.2%, 50.0% or 61.8%. We would put the tool to use in a trading scenario by waiting until price action trades to one of those Fib levels and then shows a “bottoming pattern”. For example, some candles with long wicks below the bodies, dojis, spinning tops or a Morning Star bullish reversal pattern would be a couple of examples showing that the pair has, perchance, bottomed and is looking to reverse.We could then take a long (buy) position back in the direction of the overall trend. Our stop would go just below the lowest point that price action penetrated a Fib level during the retracement.

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

DISCLOSURES

News & Analysis at your fingertips.