Fibonacci Trading

If you are an active trader you might have noticed that market follow certain patterns. A pattern that consistently occurs is consolidation between price ranges.

During intra-day trading (especially during non volatile Asia timing), market often trade in a tight range, consolidating a recent move, and then move to another range and repeat the process. Having said that, even during market trends, prices tend to target specific level before moving on to the next region. One of the best way to forecast price target is through Fibonacci retracement analysis.

Fibonacci retracement analysis can be used to confirm an entry-level, target a take profit level as well as determine your stop loss level.

NQ Chart dated: 21st Jan 2022(Friday)

There are no restrictions on the time frames that you can use Fibonacci ratios. You should feel just as comfortable using this technique on intra-day data as you would on daily or weekly prices.

The golden ratios will work on all periods you decide to analyse. You can use Fibonacci numbers as a method for finding support and resistance levels, as well as for risk management.

You can predetermine your stop loss level and profit taking level using Fibonacci retracement before you enter a trade.

In the above NQ example, this is a intra-day 618 tick chart. You can see in the chart that the Fibonacci Retracement levels act like magnets creating a self-fulfilling prophecy. Enter your buy order when price retrace to buy cluster (61.8%, 50% &/or 38.2%), you can set your profit taking at 100%, 161% or 261% (Depends on how well the market is acting on the support & resistance levels(S/R Levels) that this Fibonacci Retracement tool has created.

You can also make small profit by trading on Candlestick signal that are happening at those FIB S/R levels.