How To Use The Forex Fibonacci

How to use it

Based on the discussion above, the use of Fibonacci is pretty simple. Obviously, it relies on a trend strategy.

One method is based on the retracements providing you a low risk place to buy in the general trend direction. This method involves taking a trend and applying the retracement pattern over it. The graph will represent the place where short term reversals are expected, giving you a chance to identify an entry level where the position will bounce back to the original trend. This is most effective with a longer term trend and best with larger pip trends. For risk purposes, it is best to also have other indicators that support this position.

Another method is to use the targets to identify where to exit a trade. Since the Fibonacci measures reversals, selling at the 61.8% or 38.2% levels will allow you to take a profit off the position where the market is expected to bounce backwards in the opposite direction.

The Fibonacci sequence and reversals occur in trading charts with surprising frequency, providing the key to identifying many trading opportunities. The trick is to train yourself to understand how to use it properly, so time should be taken to develop your strategy skills that also utilizes other indicators to provide support for your trade.

Video length: 00:14:21

 

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Disclaimer: Foreign exchange (Forex) trading carries a high level of risk and may not be suitable for all investors. The risk grows as the leverage is higher. Investment objectives, ...

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