clarification needed on trading with fibs

[MickMason]

Originally Posted by foamgod

Was that source wrong?

I guess....

[foamgod]

Originally Posted by MickMason

I guess....

Then what does 61.8 or the rest of the levels mean?

I got that info from my wretched broker though. *MAD*

[MickMason]

Originally Posted by foamgod

Then what does 61.8 or the rest of the levels mean?

I got that info from my wretched broker though. *MAD*

How do you mean "what does 61.8 or the rest of the levels mean"?

Know your instrument. A 61.8% retracement in Eur/Usd may mean something different than a 61.8% retracement in Cable.

Foamgod, are you making money? Well ok then, why fix what ain't broke...

Mick

[foamgod]

Yes I am making money but I am not using fibo. But since I am just bumping around waiting for prices to move, why not make myself useful and pick up something? Since you happen to be an expert in this area, I thought I would just ask this by-the-way.

And I play all instruments........ I just feel MT4 offers too few pairs. :P

And below is what my broker told me, pasted here wholesale. If you would be nice, pray tell what is right and what is wrong. If you are not free, oh well...

Fibonacci numbers are commonly used in Technical Analysis to determine potential support, resistance, and price objectives. 38.2% retracements usually imply that the prior trend will continue, 61.8% retracements imply a new trend is establishing itself. A 50% retracement implies indecision. 38.2% retracements are considered natural retracements in a healthy trend.

Essentially the Fibonacci retracement is best for determining when a trend is likely to resume. If there is a strong uptrend and the market starts to fall towards the 38.2% line, an ideal case would show the price dip just below the Fib line before buyers step back in and drive the price back up towards the top of the trend.

The three major Fib levels are all possible places to enter a trade. In the perfect situation, the price will fall just below any one of the levels, and once it moves back above you can buy to enter the trade. To be more conservative, you can wait for the hourly or daily candle to close above the line.

[MickMason]

Originally Posted by foamgod

..since I am just bumping around waiting for prices to move

And below is what my broker told me

"......61.8% retracements imply a new trend is establishing itself.

The three major Fib levels are all possible places to enter a trade. In the perfect situation, the price will fall just below any one of the levels, and once it moves back above you can buy to enter the trade."

Don't worry, you'll be busy in an hour or so I'm just doing my end of quarter accounts and paying bills

What your broker said contradicts itself to a certain extent, at best it's misleading. I've found on Eur/Usd and Swissy 50% is usual, on Cable it's 50 and 61.8, on 4hr charts it seems to be mainly 50%. 38.2% can also be significant, if price comes off there it usually indicates a strong trend.....but then as you know, nothing is set in stone! A lot of the time it's the price action surrounding those levels that hint at where it's headed.

That's my take on it anyway, others may disagree.

Mick

[foamgod]

Thanks pal. It's interesting to know that fib levels actually mean different things to different pairs... looks like it would be better for me to stick to what I have, and leave fib for later!

[MickMason]

Originally Posted by foamgod

It's interesting to know that fib levels actually mean different things to different pairs...

And different things to different people, Fibs can be very subjective, but then again I guess that's true of a lot of chart pattern and indicator interpretations.

Catch you later anyway, I'm done, I'll see what the Fed said later on

Have a good one, what's left of it

Mick

[DaveB]

Thanks a bunch Mick and Foamgod, just to be clear in a down trend begin with 0 at the low and extend upwards so highest point is at 100 and vice versa for a up trend.

Good discussion

regards,
Dave