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Fibs 101

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This topic contains 1,543 replies, has 59 voices, and was last updated by C c 1 week, 4 days ago.

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  • #29149
    Raj Vaid
    Raj Vaid
    Participant
    • Topics: 2
    • Replies: 523

    Hi fellow traders, some were asking how they can use fibonacci in their trading. Let’s do this step by step as I have some time commitments. So I will add to this post, and if you have questions along the way, feel free to ask.

    Set up fib tool with the following levels (leave the presets in there, but get rid of 268 468 etc)
    0.786 = 786
    0.86 = 86
    -0.618 = 162
    -0.27 = 127
    -0.18 = 118

    Your fib should look like the one in the first attachment.

    I’ve included examples of swing trades. Have a look and I’ll post more on this subject later.

    Cheers.

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    #29210
    Moaied Suhail
    moaied suhail
    Participant
    • Topics: 1
    • Replies: 574

    looking forward

    #29287
    MUSTAZAH ABDUL RAHIM
    MUSTAZAH ABDUL RAHIM
    Spectator
    • Topics: 0
    • Replies: 5

    I’m looking forward..thanks for shating

    #29358
    Nicolaas Kolz
    Nicolaas Kolz
    Spectator
    • Topics: 0
    • Replies: 2

    This is pretty amazing!
    So you actually create waves from A-D. Really amazing.
    What I like is that you draw the initial line from a high to a low or low to high like I do on the normal fibo.
    I added like you said but don’t know exactly which ones to delete.
    Thanks

    #29374
    Raj Vaid
    Raj Vaid
    Participant
    • Topics: 2
    • Replies: 523

    delete 1.618, 2.618 and 4.236

    #29404
    Raj Vaid
    Raj Vaid
    Participant
    • Topics: 2
    • Replies: 523

    You have to plug in -0.618 instead of what the default says….this will give you the proper 162%

    #29662
    Raj Vaid
    Raj Vaid
    Participant
    • Topics: 2
    • Replies: 523

    I took a trade on gbp/cad the other day that I’d like to share. My entry was not ideal as I thought that we were going to get a 618 bounce as there were two bullish candle formations at this level. Market decided to pull down to the 86 fib. This would have been the ideal entry. So if we had an 86 retrace, I targeted the 118 profit level. I am happy to report that today the market reached that level, and subsequently has pulled back.

    Cheers.

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    #29675
    Ashok Pandey
    Ashok Pandey
    Spectator
    • Topics: 0
    • Replies: 2

    Hi Raj,

    Thanks for sharing. I just wanted to know How you decide ABCD? Do you trade Elliot wave along with fibo? Thanks.

    #29744
    Raj Vaid
    Raj Vaid
    Participant
    • Topics: 2
    • Replies: 523

    Hi Ashok, no Elliot wave doesn’t come into play with fibs. As far as where to start ABCD…well this explanation can get very complicated because it took me a long time to figure this out…..so let me put it into terms that you already know with respect to the BB strategy. When you get a daily CF , with BB breach, you can start your ABCD on 1hr, or 4hr chart then….basically it gives you optimal entry as the majority of time the daily CF will be tested.

    Then when point D is hit, you start your next swing….C becomes A, D becomnes B etc….see new swing for gbp/cad chart.

    Cheers

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    #29824
    Raj Vaid
    Raj Vaid
    Participant
    • Topics: 2
    • Replies: 523

    As far as where to start the fibs, see these two gbp/cad charts – both 4hr. First one crunched to show you how to follow fibs, and the expanded one to show you latest AB swing.

    Hope this helps.

    Cheers

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    #30223
    Raj Vaid
    Raj Vaid
    Participant
    • Topics: 2
    • Replies: 523

    So I had three reasons to short the other day
    1. 618 resistance
    2. Trendline
    3. past support acting as resistance now.

    Trade running just shy of 100 pips.

    Cheers

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    #31915
    Marek Herde
    marek herde
    Spectator
    • Topics: 0
    • Replies: 20

    I would like to discuss the way, we should plot Fibonacci line on some examples and i am curious about your answers.
    I have attached EUR/CAD example to explain what i mean.
    I have noticed, that when i plot my Fibonacci from the top to the bottom trend using very long upper or lower wick ( shown on the chart), The picture of the resistance or support of the candles to Fibonacci levels like 61.8 is not as precise. I did few tests to confirm that. Then i plotted it a bit different by switching to the line chart and plotted right on the top or the bottom of the candle.( when the actual body of the candle closes or opens. The result is quite different and precisely shows the exact point of the resistance without a gap.
    I noticed that, when the upper or lower wick is small, it doesn’t really matter, long wicks can affect the way we plan our TP or SL in case we use Fibo strategy. Here are the charts!

    https://charts.mql5.com/7/717/eurcadv-d1-atom8-financial-services-2.png
    https://charts.mql5.com/7/717/eurcadv-d1-atom8-financial-services-4.png
    To me, that little difference does matter πŸ™‚

    #31944
    Sebastian Brandt
    Sebastian Brandt
    Participant
    • Topics: 0
    • Replies: 415

    Thank you market, looks interesting and I have to do further testing to see what works best.

    #33298
    Raj Vaid
    Raj Vaid
    Participant
    • Topics: 2
    • Replies: 523

    382 and 618 are reciprical fibs…..they are the strongest support/resistance levels we have. Ive attached an example of a chart….you can see how the market respecvts these two levels.

    Cheers.

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    #34098
    Sebastian Brandt
    Sebastian Brandt
    Participant
    • Topics: 0
    • Replies: 415

    Raj,
    or everybody else who might know it πŸ™‚

    Do you guys know a way we can switch between different Fibonacci settings? For example for novice traders who want to try both Fibonacci settings to “play around” and to see what fits them best.

    When I change the object settings it’s changed for every new Fibonacci.

    #34116
    TJ '
    TJ ‘
    Participant
    • Topics: 0
    • Replies: 99

    Hi Sebastian,
    This is a limitation of MT4, everytime you remove a value then you have to re-enter it when you want it back rather than being able to select different value with a check box for example.
    My work around, is that I keep all of them and when it’s too tight to clearly see the result, I use the scale function to make the chart clearer.
    I know that there is a way by playing with the ini file but I haven’t got any good result with that option.
    Good luck!

    #34144
    Sebastian Brandt
    Sebastian Brandt
    Participant
    • Topics: 0
    • Replies: 415

    TJ,

    thanks for your feedback.

    So you added Raj’s levels (the minus level below zero) and you have the normal levels above 100% as well, right? Seems to be a good idea. I’ll try it.

    #34152
    TJ '
    TJ ‘
    Participant
    • Topics: 0
    • Replies: 99

    So you added Raj’s levels (the minus level below zero) and you have the normal levels above 100% as well,

    Exactly Sebastian.

    #34156
    Sebastian Brandt
    Sebastian Brandt
    Participant
    • Topics: 0
    • Replies: 415

    Just tried that, looks very good, thanks for the good idea.

    I can now use both, the normal extensions, e.g. for engulfing candles and the “normal fib targets” Chris describes.

    And I can use Raj system, e.g. if I understand it correctly, we can use it for EUR/USD now:
    – currently retracement maybe up to 38.2?
    – extension up to 162%

    I’m still excited if the bat-pattern works πŸ™‚

    #34426
    Marek Herde
    marek herde
    Spectator
    • Topics: 0
    • Replies: 20

    Hi Rai πŸ™‚
    Could you please explain us what are these 86 and 786 levels mean?
    They seem to be so close to each other. Thank you very much!

    #34510
    Raj Vaid
    Raj Vaid
    Participant
    • Topics: 2
    • Replies: 523

    Hi Marek, they are fib support and resistance levels just like 382 or 618.

    #34557
    Sebastian Brandt
    Sebastian Brandt
    Participant
    • Topics: 0
    • Replies: 415

    Marek,

    iIf I understood it correctly from Raj explanations a retracement to 78.6 will often extend to 127%, whereas a retracement to 86% will often extend to 118%.

    But somebody knows why some people use 78.6% and others seem to use 76.4% – I’ve read about both levels. I’m just wondering which levels is more reliable and why some people use the other level.

    #34563
    Marek Herde
    marek herde
    Spectator
    • Topics: 0
    • Replies: 20

    Thank Rai and Sebastian πŸ™‚

    I heard from very successful UK trader, that 78.6 and 86 levels are very important for big, major price movers like banks, hedge funds etc. Wonder why?

    #34597
    TJ '
    TJ ‘
    Participant
    • Topics: 0
    • Replies: 99

    78.6 and 86 levels are very important for big, major price movers

    I know that those levels are very popular to trade harmonic patterns.

    #34666
    Raj Vaid
    Raj Vaid
    Participant
    • Topics: 2
    • Replies: 523

    Fib convergences are beautiful things. See aussie chart….monthly down move hits its target, which is the 618 support level on the major upswing, and market tells you to go long on mnthly TF. Initially stalling at the 23.6 percent retrace (I always ignore this one). And while the market sits at another resistance at the moment, 90 percent of the time retraces go up to the 382 at minimum.

    Cheers

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    #34668
    Ivo R
    Ivo R
    Spectator
    • Topics: 0
    • Replies: 7

    Hey Raj and everyone,

    Raj I tried to draw fibos the way you do today. I’m not entirely shure I understand it but can you give a quick look at the following chart and tell me if I did a good job or totaly bad job πŸ˜‰ Thank you so much:

    Here is my try on an uptrend:

    https://www.mql5.com/en/charts/3435191/eurcad-d1-axicorp-financial-services

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    #34676
    Raj Vaid
    Raj Vaid
    Participant
    • Topics: 2
    • Replies: 523

    Looks great.

    cheers

    #34686
    Ivo R
    Ivo R
    Spectator
    • Topics: 0
    • Replies: 7

    Hey Raj,

    And here are my efforts for a downtrend, please halp if I’m doing this totaly wrong, or slightly wrong πŸ˜‰ I’m really not shure of what I’m doing yet.

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    #34689
    Ivo R
    Ivo R
    Spectator
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    • Replies: 7

    Hehehe, thank you Raj, can you check the downtrend one πŸ˜€

    #34711
    Raj Vaid
    Raj Vaid
    Participant
    • Topics: 2
    • Replies: 523

    Hi Ivo, you don’t have a low yet (centre candle with two to the left and two to the right at higher prices than the centre candle) so can not pull that fib yet.
    Ive attached bearish swings.

    cheers

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    #34714
    Raj Vaid
    Raj Vaid
    Participant
    • Topics: 2
    • Replies: 523

    you can see that the daily 382 fib is acting as resistance right now on the chart!!

    cheers

    #34716
    Raj Vaid
    Raj Vaid
    Participant
    • Topics: 2
    • Replies: 523

    4hr swings on Aussie.

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    #34724
    Marek Herde
    marek herde
    Spectator
    • Topics: 0
    • Replies: 20

    Rai,

    May I ask the reason why we need to look for two candlesticks before and two after to plot the lowest or highest point please? If we have reversal candle of strong body, isn’t it enough to plot our Fibonacci then? Let me know please πŸ™‚

    #34726
    Raj Vaid
    Raj Vaid
    Participant
    • Topics: 2
    • Replies: 523

    Hi Marek, I always plot fits from a high to a low and vice versa. And by definition a low has to have two candles to the right at higher price than centre candle. If you don’t have that and the next candle dips below, that means your fib swing is invalid and you don’t have a low at all. We have to have a mature swing so that the market has a chance to retrace properly. Having said that, if you don’t have a low on a daily chart yet, you might have it on the 4hr.

    Hope this makes sense.

    #34731
    Marek Herde
    marek herde
    Spectator
    • Topics: 0
    • Replies: 20

    Hi!

    Yes it does make sense. I am new to it and I don’t know this sort of subtle principles. Thanks for opening my eyes to it.
    I am not confident with plotting Fibo on shorter time frames. I do sometimes plot resistance and support lines, but that’s about it. I will try though as a test. I am not sure, whether Fibo plotted on lower time frame can be treated seriously in relation to daily timeframe for instance. What do you think? I try to stay away from shorter time frames in general as it is not so reliable.
    I have another question to you, if you could kindly answer please.
    Do you use Fibonacci by plotting it on one engulfing candle which is part of the formed setup, or you only use Fibonacci for retracement measures and plot it on the previous wave? Thank you very much. I hope, I am clear with my last question πŸ™‚

    #34753
    Himanshu Sahai
    Himanshu Sahai
    Spectator
    • Topics: 0
    • Replies: 10

    Hi Raj

    Thanks for this new way for trading with fib levels.Really appreciated.I think we have to draw fib levels in normal way when working with these levels that you suggested above.Once again thanks.

    #34759
    Raj Vaid
    Raj Vaid
    Participant
    • Topics: 2
    • Replies: 523

    Hi Marek, yes let’s stay away from lower TF, even though fibs work on all TF, but the larger the TF, the greater the fib supp/res levels. It’s good enough to keep your major daily fib swing on your charts as you get a clear picture of the retraces etc happening, and you know the fib supp/res on daily – you know that if the market is coming towards a fib level that something might happen, either to look for a CF to enter a trade or to take profits.

    As far as pulling a fib on say a daily candle alone, well this really means you are doing it on the 1hr chart does it not? See example of Kiwi chart for the power of knowing the latest AB boundary on the daily chart.

    Hope it’s clear

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    #34773
    Marek Herde
    marek herde
    Spectator
    • Topics: 0
    • Replies: 20

    Rai,

    I meant something else. I was referring to Chris’s way of plotting Fibo on daily candle, which engulf previous candle on the strong setup. In that case 0% would be at the start of the candle in long setup and 100% on the top wick of that candle. Opposite to short setup. That way, you can establish some TP level without plotting it on the whole matured wave. Its just a another way of doing it, that’s all. To do it the way I explain, you would need to reset Fibo levels in properties though. Are you familiar with that technic? Its also effective according to Chris. Thank you πŸ™‚

    #34781
    Raj Vaid
    Raj Vaid
    Participant
    • Topics: 2
    • Replies: 523

    The 162 per cent should roughly be the same either method.

    But plotting fib on a single candle to me is the same as doing it on the 1hr chart….difference being that on the one hour chart you can watch the retracement and enter at a fib level for optimal entry.

    Is this what you mean?

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    #34785
    Raj Vaid
    Raj Vaid
    Participant
    • Topics: 2
    • Replies: 523

    nice, in a few minutes we hit the target!!

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