Example 1.Eur/Jpy trade
On the Eur/Jpy daily chart you can see that there was a correction up to the 50% retracement line. Earlier, the 200 simple moving average worked as support, so it was best to wait until a price breakdown through the support. It took place at the end of April:
The breakdown here was the entry signal to take a short position at Eur/Jpy. Earlier we have identified the ABC pattern, now we are looking for point D. The move down is very strong. There is some reaction at the 127% extension line – you could close some part of your position here. In this case, I waited until the price reached the 161.8% extension – this was my point D and I closed my position there.
Later, there was an opportunity to re-enter the short position when the price continued to move down.
Example 2.Eur/Jpy onlower time frames
When you spot a situation like the one shown in the first example, remember that there may also be also a number of occasions to place good trade orders on lower time frames. When there is a break above/below an important support/resistance, lower your time frame and look for trade opportunities in the direction of the breakout. In the example there were plenty of trade opportunities on the 1-hour chart (and other time frames):
In the example above, there are two good entry signals. The first one after the break below the red trend line, the second one after the break below the support and the 0% Fibonacci line.The price went down to the 138% extension line and it was a good point to take profit. Look at the chart closely – later there was another breakdown and you could use the Fibonacci tools again to enter and exit another short position.
Example 3. Short at Nzd/Usd
In this example, we can see a standard ABC pattern at the beginning of the downtrend. The correction went up to the 50% retracement line (our point C). After that, there was a quick move down to the 127% extension line, which was the best place to take the profit or at least to close part of the position.
There are a few points you could enter the trade at, but let’s focus on the bigger picture. After the move to point D there was another correction. You could draw other retracement lines for this move, but pay attention to how the extension lines from the first move were working. After another breakdown, there was a strong sell-off down to the 261.8% extension line from the first move.
This is a good example that you should, from time to time, also look at the extension lines from earlier moves.
Example 4. A failed breakout
In the example below, you can see an Aud/Usd 1-hour chart. There was a break above the 200 simple moving average and you could spot an ABC pattern. A few hours later there was a breakout with the close above the recent high. It looked like a good entry point and you would probably open a position here. Suddenly, there was a move back and a strong sell-off. That is why you should always have a stop loss order!
The advanced guide to fibonacci trading - parts:PART 1. INTRODUCTION
Basic information about Fibonacci numbers and why it is good to know how to use them.
PART 2. THE FIBONACCI RETRACEMENT LEVELS
How they are build and how to draw them to find possible leveles during correction.
PART 3. THE FIBONACCI PROJECTIONS
How to predict where is the best place to exit trade - Fibonacci Extension and Expansion will be helpful here.
PART 4. THE FIBONACCI CONVERGENCE
Learn what convergence is and how to spot it.
PART 5. WHEN TO ENTER A TRADE – A SAFE SCENARIO
Here we put knowledge into practice - you will learn a safe way of opening positions.
PART 6. WHEN TO ENTER – A RISKIER SCENARIO
Little bit riskier scenario of opening trades where possible profit is bigger.
PART 7. WHEN TO EXIT A TRADE
Closing trade is very important, but where is the best place? This should help you to find the best place to exit.
PART 8. MY TEMPLATE
Few examples of different templates you can use in Metatrader software.
PART 9. A FEW IMPORTANT THINGS YOU SHOULD KNOW
How to define trend, the importance of the higher time frame and how to trade the news with Fibonacci tools.
PART 10. FIBONACCI AND PIVOT POINTS
How to combine Fibonacci tools and pivot points.
PART 11. MONEY MANAGEMENT
Proper money management is very important - without it you will be loosing money fast.
PART 12. MORE EXAMPLES OF TRADES
More exapmles where we put together knowledge from guide.
13. THE “HOW-TO” ARTICLES
Few helpful articles about installing templates and using Fibonacci tools.