what to use to determine how long a position should be held?

[patrick_fx]

4X4X, thank you again. You are so kind sharing me a lot of info. I installed and tried MetaTrader 3.86 (the 3.83 freezes up on my machine all the time). It’s a very versatile charting program. I did some reading about the Fibonacci Retracement and tried it on MT. I am still not quite sure I understand how to interpret the Fibonacci indicator. Please look at the chart at the bottom.

First of all, did I put the Fibonacci Retracement at right place? I tried to start the 0.0 level from the oldest resistance level (1.3225). Then after the price broke from the support level 23.6 (blue line), the new support level was 76.4 (yellow line). How do I know that the new support level would be around 76.4? It could be 38.2, 50.0, 61.8, 76.4, or 100.0. Or when price broke the resistance level (brown line) and form a new support level (red line), how do I know the new levels would be 38.2? It could be 50.0, 38.2, 23.6, or 0.0. Did I miss some steps here? Please advice.

Thank you for the mql source code for Pivot Point. I’m studying the Pivot Point theory and will try it very soon (the concept still confuse me). The www.forextradersworld.com has a ton of info. It looks like I’ll have a lot of homework to do this weekend.



Very appreciate your help,
Patrick

[4X4X]

Originally Posted by patrick_fx

How do I know that the new support level would be around 76.4? It could be 38.2, 50.0, 61.8, 76.4, or 100.0. Or when price broke the resistance level (brown line) and form a new support level (red line), how do I know the new levels would be 38.2? It could be 50.0, 38.2, 23.6, or 0.0. Did I miss some steps here? Please advice.

Hi Patrick,

Please bear in mind that Fib retracements are drawn on prior moves to calculate support/resistance for the current ones. One more thing, If the market is currently rising, you will draw fibos on prior big move from top to down, and did it right.

Fibos give you the points where the market is likely to halt, then either change its direction or have a retracement and then break the level here it previously halted with greater force. Whether a fib level will hold or broken, can be judged from 1. overall sense of the market 2. drawing a few trendlines and 3. the momentum with which it advanced.

It is therefore suggested to if you go short on a break of a support or having touched the resistance if the market takes a U turn, you have your target upto the next support, take your profit and observe price action at that level. By the way 61.8% retracement level is considered to be a level of maximum retracement and then the market continues it main trend.

If you draw from top of 2nd Dec-05 to bottom of 6th Dec-05, infact double bottom on 5/6th Dec-05 is one more strong indication that the market will change it course, atleast temporarily. Now see having touched 61.8% retracement how the market continued its main trend.

On 6th Dec what you have to predict the future technically? You have top of 1.3234 double bottom of 1.3035, draw a fib b/w the two, at the bottom you could have gone long safely with the target of 50-60% retracement. This is how it works.

On a 4 hourly chart if you draw fib from top 1.3288 to bottom of 1.2990, you have all major support and resistance. Now, also observe on 4 hrly chart of USDCHF that the market is in this range or Channel with the formation of lower highs and bottoms.