Pathshala: Fibonacci 14

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<h1 style="text-align: justify;">
Fibonacci Who?</h1>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj_uOPa63lIKhijU7tyaGZgg8BCtZmoFWzVGx9vxGS_srl4zi9rSeDYGIeVikhcT_A9mjC_ySlNIVXqPsIlLpcgp-vcoCI0siAALnj8sAVNd2lCAxj994aaSO4w9JE7EY8y-ELOgKX0Tk4/s1600/Fibonacci.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="222" data-original-width="485" height="146" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj_uOPa63lIKhijU7tyaGZgg8BCtZmoFWzVGx9vxGS_srl4zi9rSeDYGIeVikhcT_A9mjC_ySlNIVXqPsIlLpcgp-vcoCI0siAALnj8sAVNd2lCAxj994aaSO4w9JE7EY8y-ELOgKX0Tk4/s320/Fibonacci.png" width="320" /></a><span style="font-family: "arial" , "helvetica" , sans-serif;">We will be using Fibonacci ratios a lot in our trading so you better 
learn it and love it like your mother's home cooking. Fibonacci is a 
huge subject and there are many different Fibonacci studies with 
weird-sounding names but we're going to stick to two: retracement and 
extension. Let us first start by introducing you to the Fib man himself...Leonardo Fibonacci.

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<span style="font-family: "arial" , "helvetica" , sans-serif;"></span><span style="font-family: "arial" , "helvetica" , sans-serif;">No, Leonardo Fibonacci isn't some famous chef. Actually, he was a 
famous Italian mathematician, also known as a super duper uber ultra 
geek. </span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">He discovered a simple series of numbers
 that created ratios describing the natural proportions of things in the
 universe.</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">The ratios arise from the following number series: 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144...</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">This series of numbers is derived by starting with 1 followed by 2 
and then adding 1 + 2 to get 3, the third number. Then, adding 2 + 3 to 
get 5, the fourth number, and so on.</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">After the first few numbers in the sequence, if you measure the ratio
 of any number to the succeeding higher number, you get .618. For 
example, 34 divided by 55 equals .618.</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">If you measure the ratio between alternate numbers you get .382. For 
example, 34 divided by 89 = 0.382 and that's as far as into the 
explanation as we'll go.</span></div>
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</span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;">These ratios are called the "golden mean". Okay that's enough mumbo 
jumbo. With all those numbers, you could put an elephant to sleep. We'll
 just cut to the chase; these are the ratios you HAVE to know:</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><b>Fibonacci Retracement Levels</b> <br />
0.236, 0.382, 0.500, 0.618, 0.764</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><b>Fibonacci Extension Levels</b><br />
0, 0.382, 0.618, 1.000, 1.382, 1.618</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">You won't really need to know how to calculate all of this. Your 
charting software will do all the work for you. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Besides, we've got a 
nice Fibonacci calculator
 that can magically calculate those levels for you. However, it's always
 good to be familiar with the basic theory behind the indicator so 
you'll have the knowledge to impress your date. </span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Traders use the Fibonacci retracement levels as potential <b>support and resistance areas</b>.
 Since so many traders watch these same levels and place buy and sell 
orders on them to enter trades or place stops, the support and 
resistance levels tend to become a self-fulfilling prophecy. </span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Traders use the Fibonacci extension levels as <b>profit taking levels</b>. </span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Again, since so many traders are watching these levels to place buy and
 sell orders to take profits, this tool tends to work more often than 
not due to self-fulfilling expectations. </span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Most charting software includes both Fibonacci retracement levels and
 extension level tools. </span><br />
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<b><span style="font-family: "arial" , "helvetica" , sans-serif;">In order to apply Fibonacci levels to your 
charts, you'll need to identify Swing High and Swing Low points. A Swing High is a candlestick with at least two lower highs on both the left and right of itself. A Swing Low is a candlestick with at least two higher lows on both the left and right of itself. </span></b><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;">You got all that? Don't worry, we'll explain retracements, 
extensions, and most importantly, how to grab some pips using the Fib 
tool in the following </span><span style="font-family: "arial" , "helvetica" , sans-serif;">lessons. </span></div>
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<h2 style="text-align: left;">
How to Use Fibonacci Retracement to Enter a Trade</h2>
<span style="font-family: "arial" , "helvetica" , sans-serif;">The first thing you should know about the Fibonacci tool is that it works best when the market is trending. </span><br />
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</span><span style="font-family: "arial" , "helvetica" , sans-serif;">The idea is to go long (or buy) on a retracement at a Fibonacci 
support level when the market is trending up, and to go short (or sell) 
on a retracement at a Fibonacci resistance level when the market is 
trending down. </span><br />
<h2>
Finding Fibonacci Retracement Levels</h2>
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</span><span style="font-family: "arial" , "helvetica" , sans-serif;">In order to find these retracement levels, you have to find the 
recent significant Swing Highs and Swings Lows. Then, for downtrends, 
click on the Swing High and drag the cursor to the most recent Swing 
Low. </span>
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For uptrends, do the opposite. Click on the Swing Low and drag the cursor to the most recent Swing High. </span><br />
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</span><span style="font-family: "arial" , "helvetica" , sans-serif;">Got that? Now, let's take a look at some examples on how to apply Fibonacci retracements levels in the markets. </span><br />
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<h2>
<span style="font-family: "arial" , "helvetica" , sans-serif;">Uptrend</span></h2>
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</span><span style="font-family: "arial" , "helvetica" , sans-serif;">This is a daily chart of AUD/USD. </span><br />
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</span><span style="font-family: "arial" , "helvetica" , sans-serif;"> </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Here we plotted the Fibonacci retracement Levels by clicking on the 
Swing Low at .6955 on April 20 and dragging the cursor to the Swing High
 at .8264 on June 3. Tada! The software magically shows you the 
retracement levels. </span><br />
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</span><span style="font-family: "arial" , "helvetica" , sans-serif;">As you can see from the chart, the retracement levels were .7955 
(23.6%), .7764 (38.2%), .7609 (50.0%), .7454 (61.8%), and .7263 (76.4%). </span><br />
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</span><span style="font-family: "arial" , "helvetica" , sans-serif;">Now, the expectation is that if AUD/USD retraces from the recent 
high, it will find support at one of those Fibonacci levels because 
traders will be placing buy orders at these levels as price pulls back. </span><br />
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</span><span style="font-family: "arial" , "helvetica" , sans-serif;">Now, let's look at what happened after the Swing High occurred. </span><br />
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</span><span style="font-family: "arial" , "helvetica" , sans-serif;"> </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Price pulled back right through the 23.6% level and continued to 
shoot down over the next couple of weeks. It even tested the 38.2% level
 but was unable to close below it. </span><br />
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</span><span style="font-family: "arial" , "helvetica" , sans-serif;">Later on, around July 14, the market resumed its upward move and 
eventually broke through the swing high. Clearly, buying at the 38.2% 
Fibonacci level would have been a profitable long term trade!</span><br />
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<h2>
<span style="font-family: "arial" , "helvetica" , sans-serif;">Downtrend</span></h2>
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</span><span style="font-family: "arial" , "helvetica" , sans-serif;">Now, let's see how we would use the Fibonacci retracement tool during a downtrend. Below is a 4-hour chart of EUR/USD. </span><br />
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</span><span style="font-family: "arial" , "helvetica" , sans-serif;"> </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">As you can see, we found our Swing High at 1.4195 on January 26 and 
our Swing Low at 1.3854 a few days later on February 2. The retracement 
levels are 1.3933 (23.6%), 1.3983 (38.2%), 1.4023 (50.0%), 1.4064 
(61.8%) and 1.4114 (76.4%). </span><br />
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</span><span style="font-family: "arial" , "helvetica" , sans-serif;">The expectation for a downtrend is that if price retraces from this 
low, it will encounter resistance at one of the Fibonacci levels because
 traders will be ready with sell orders there.</span><br />
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</span><span style="font-family: "arial" , "helvetica" , sans-serif;">Let's take a look at what happened next. </span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;">I</span>sn't that a thing of beauty?! </span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">The market did try to rally, stalled below the 38.2% level for a bit 
before testing the 50.0% level. If you had some orders either at the 
38.2% or 50.0% levels, you would've made some mad pips on that trade.</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">In these two examples, we see that price <i>found</i> some 
temporary support or resistance at Fibonacci retracement levels. Because
 of all the people who use the Fibonacci tool, those levels become 
self-fulfilling support and resistance levels. </span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">One thing you should take note of is that price won't always bounce from these levels. They should be looked at as <i>areas of interest</i>, or as Cyclopip likes to call them, "<b>KILL ZONES!</b>" We'll teach you more about that later on. </span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">For now, there's something you should always remember about using the
 Fibonacci tool and it's that they are not always simple to use! If they
 were that simple, traders would always place their orders at Fib levels
 and the markets would trend forever. </span></div>
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</span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;">In the next lesson, we'll show you what can happen when Fibonacci levels fail. </span></div>
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</h1>
<h2 style="text-align: left;">
Fibonacci Retracements are NOT Foolproof or When Fibonacci Fails</h2>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Back in previous lesson , we said that support and resistance levels 
eventually break. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Well, seeing as how Fibonacci levels are used to find 
support and resistance levels, this also applies to Fibonacci! </span><br />
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Fibonacci retracements do NOT always work! They are not foolproof.</span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Now, let's go through an example when the Fibonacci retracement tool fails. </span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Below is a 4-hour chart of GBP/USD. Here, you see that the pair has been in downtrend, so you decided to 
take out your Fibonacci tool to help you spot a good entry point. You 
use the Swing High at 1.5383, with a swing low at 1.4799. You see that the pair has been stalling at the 50.0% level for the past couple of candles. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">You say to yourself, "Oh man, that 50.0% Fib level! It's holding baby! Time to short this sucka!" You short at market and start day dreaming that <span style="font-family: "arial" , "helvetica" , sans-serif;">.....</span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Now, if you really did put an order at that level, not only would 
your dreams go up in smoke, but your account would take a serious hit if
 you didn't manage your risk properly! </span></div>
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</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Take a look at what happened. </span></div>
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</span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjLi0ovrmVsSn-mJy9DAM4T-YkcCY62hYOTETqOiIMgXnRG29-_lk59X79KfGysDigYeG4kBlN_lMHp0VqHTlK0UAvFnTw2uh74K9XK9nXbrElYXWAdUAyKDOwYBL9WEfE_J1yzMHu-xMQ/s1600/grade3-fibonacci-fail-end.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="298" data-original-width="525" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjLi0ovrmVsSn-mJy9DAM4T-YkcCY62hYOTETqOiIMgXnRG29-_lk59X79KfGysDigYeG4kBlN_lMHp0VqHTlK0UAvFnTw2uh74K9XK9nXbrElYXWAdUAyKDOwYBL9WEfE_J1yzMHu-xMQ/s1600/grade3-fibonacci-fail-end.png" /></a></div>
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<div style="text-align: justify;">
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">It turns out that that Swing Low was the bottom of the downtrend and market began to rally above the Swing High point.</span></div>
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</span></div>
<div style="text-align: justify;">
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">What's the lesson here? </span></div>
<div style="text-align: justify;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">

</span></div>
<div style="text-align: justify;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">While Fibonacci levels give you a higher probability of success, like
 other technical tools, they don't always work. You don't know if price 
will reverse to the 38.2% level before resuming the trend. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Sometimes it may hit 50.0% or the 61.8% levels before turning around.
 Heck, sometimes price will just ignore Mr. Fibonacci and blow past all 
the levels just like how Lebron James bullies his way through the lane 
with sheer force.

</span></div>
<div style="text-align: justify;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">Remember, the market will not always resume its uptrend after finding
 temporary support or resistance, but instead continue to go past the 
recent Swing High or Low. </span></div>
<div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: justify; text-decoration: none;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">Another common problem in using the Fibonacci tool is determining which Swing Low and Swing High to use. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">People look at charts differently, look at different time frames, and
 have their own fundamental biases. It is likely that Stephen from 
Pipbuktu and the girl from Pipanema have different ideas of where the 
Swing High and Swing Low points should be. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">The bottom line is that there is no absolute right way to do it, 
especially when the trend on the chart isn't so clear. Sometimes it 
becomes a guessing game. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">That's why you need to hone your skills and combine the Fibonacci 
tool with other tools in your trading toolbox to help give you a higher 
probability of success. </span><br />
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">In the next lesson, we'll show you how to use the Fibonacci tool in 
combination with other forms of support and resistance levels and 
candlesticks. </span><br />
<div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;">
<h1>
How to Use Fibonacci Retracement with Support and Resistance</h1>
<div style="text-align: justify;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">Like we said in the previous section, using Fibonacci levels can be 
very subjective. However, there are ways that you can help tilt the odds
 in your favor. While the Fibonacci tool is extremely useful, it shouldn't be used all by its lonesome self. </span><br />
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">It's kinda like comparing it to NBA superstar Kobe Bryant. Kobe is 
one of the greatest basketball players of all time, but even he couldn't
 win those titles by himself. He needs some backup. </span><br />
<br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Similarly, the Fibonacci tool should be used in combination with 
other tools. In this section, let's take what you've learned so far and 
try to combine them to help us spot some sweet trade setups. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Are y'all ready? Let's get this pip show on the road! </span><br />
<h2>
Fibonacci Retracement + Support and Resistance</h2>
<span style="font-family: "arial" , "helvetica" , sans-serif;">One of the best ways to use the Fibonacci tool is to spot potential support and resistance levels and see if they line up with Fibonacci retracement levels. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">If Fib levels are already support and resistance levels, and you 
combine them with other price areas that a lot of other traders are 
watching, then the chances of price bouncing from those areas are much 
higher. </span><br />
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Let's look at an example of how you can combine support and 
resistance levels with Fib levels. Below is a daily chart of USD/CHF. </span><br />
<br />
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</div>
<div style="text-align: center;">
</div>
<div style="text-align: justify;">
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">As you can see, it's been on an uptrend recently. Look at all those 
green candles! You decide that you want to get in on this long USD/CHF 
bandwagon. </span><br />
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">But the question is, "When do you enter?" You bust out the Fibonacci 
tool, using the low at 1.0132 on January 11 for the Swing Low and the 
high at 1.0899 on February 19 for the Swing High. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Now your chart looks pretty sweet with all those Fib levels.</span><br />
<br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;"> </span> </div>
<div style="text-align: center;">
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<div style="text-align: justify;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">Now that we have a framework to increase our probability of finding 
solid entry, we can answer the question "Where should you enter?" </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">You look back a little bit and you see that the 1.0510 price was good
 resistance level in the past and it just happens to line up with the 
50.0% Fib retracement level. Now that it's broken, it could turn into 
support and be a good place to buy. </span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjxeUFaJ8yUAkYrTqMi08b4kTIo1ifuHtVYVCnlO1L6l22hFocjeDlkM5BJNYcWq28wdMNDZfWynFORBV3-0qEJVvVPr25rlhq8LIvuyG1OIZIJksm9e3hTXhCsP6v4yp-kVRu2FOumif0/s1600/grade3-fibonacci-support-resistance-end-thumbnail.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="298" data-original-width="525" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjxeUFaJ8yUAkYrTqMi08b4kTIo1ifuHtVYVCnlO1L6l22hFocjeDlkM5BJNYcWq28wdMNDZfWynFORBV3-0qEJVvVPr25rlhq8LIvuyG1OIZIJksm9e3hTXhCsP6v4yp-kVRu2FOumif0/s1600/grade3-fibonacci-support-resistance-end-thumbnail.png" /></a></span></div>
</div>
<div style="text-align: center;">
</div>
<div style="text-align: justify;">
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">If you did set an order somewhere around the 50.0% Fib level, you'd be a pretty happy camper! </span><br />
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">There would have been some pretty tense moments, especially on the 
second test of the support level on April 1. Price tried to pierce 
through the support level, but failed to close below it. Eventually, the
 pair broke past the Swing High and resumed its uptrend. </span><br />
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">You can do the same setup on a downtrend as well. The point is you 
should look for price levels that seem to have been areas of interest in
 the past. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">If you think about it, there's a higher chance that price 
will bounce from these levels.</span><span style="font-family: "arial" , "helvetica" , sans-serif;"></span><span style="font-family: "arial" , "helvetica" , sans-serif;"> </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Why?</span><span style="font-family: "arial" , "helvetica" , sans-serif;"> </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">First, as we discussed in previous support or resistance 
levels would be good areas to buy or sell because other traders will 
also be eyeing these levels like a hawk.</span><span style="font-family: "arial" , "helvetica" , sans-serif;"> </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Second, since we know that a lot of traders also use the Fibonacci 
tool, they may be looking to jump in on these Fib levels themselves.</span><span style="font-family: "arial" , "helvetica" , sans-serif;"> </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">With traders looking at the same support and resistance levels, 
there's a good chance that there are a ton of orders at those price 
levels.</span><span style="font-family: "arial" , "helvetica" , sans-serif;"> </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">While there's no guarantee that price will bounce from those levels, 
at least you can be more confident about your trade. After all, there is
 strength in numbers! Remember that trading is all about probabilities. If you stick to 
those higher probability trades, then there's a better chance of coming 
out ahead in the long run.  </span></div>
<div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;">
<h1>
How to Use Fibonacci Retracement with Trend Lines</h1>
<div style="text-align: justify;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">Another good tool to combine with the Fibonacci tool is trend line analysis. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">After all, Fibonacci levels work best when the market is trending, so this makes a lot of sense! Remember that whenever a <span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;">s</span>tock</span> is in a downtrend or uptrend, traders 
use Fibonacci retracement levels as a way to get in on the trend. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">So why
 not look for levels where Fib levels line up right smack with the 
trend? </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Here's a 1-hour chart of AUD/JPY. As you can see, price has been 
respecting a short term rising trend line over the past couple of days.</span><br />
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</span><br />
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</span><br />
<div style="text-align: justify;">
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">You think to yourself, "Hmm, that's a sweet uptrend right there. I 
wanna buy AUD/JPY, even if it's just for a short term trade. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">I think 
I'll buy once the pair hits the trend line again." Before you do that though, why don't you reach for your trading tool 
box and get that Fibonacci tool out? Let's see if we can get a more 
exact entry price. </span><br />
<br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhBeq9HaP5uN5rCZ1GAg260iIEKH0WZ8YDYaeCDGb9pNd-OrjdbCz5ERHa7kwSj5kxtTTdR5EkflpWwmeGVoOb3Thyphenhyphen1Ue13iQb9apDYECG9nANqdzu3_wtZ79V7COZDkjUmCE7JMuMeobI/s1600/2.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="325" data-original-width="525" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhBeq9HaP5uN5rCZ1GAg260iIEKH0WZ8YDYaeCDGb9pNd-OrjdbCz5ERHa7kwSj5kxtTTdR5EkflpWwmeGVoOb3Thyphenhyphen1Ue13iQb9apDYECG9nANqdzu3_wtZ79V7COZDkjUmCE7JMuMeobI/s1600/2.png" /></a></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">

</span><br />
<div style="text-align: justify;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">Here we plotted the Fibonacci retracement levels by using the Swing low at 82.61 and the Swing High at 83.84. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Notice how the 50.0% and 61.8% Fib levels are intersected by the rising trend line. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Could these levels serve as potential support levels? There's only one way to find out! </span><br />
<br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhXk0h5JkDCIrBkZXo_pwo0NO7Cf10oMYlGjieJkpR8g35VPYkzkWWY1UmIOTGv9_99MPe1JRlOJPMkjhRsRy-N79dIxdp0GJ15Z2pqY3kWg6L9dMNclqlS4UlAYQQpwVvwMk7Dq-qHkyk/s1600/3.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="298" data-original-width="525" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhXk0h5JkDCIrBkZXo_pwo0NO7Cf10oMYlGjieJkpR8g35VPYkzkWWY1UmIOTGv9_99MPe1JRlOJPMkjhRsRy-N79dIxdp0GJ15Z2pqY3kWg6L9dMNclqlS4UlAYQQpwVvwMk7Dq-qHkyk/s1600/3.png" /></a></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">

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<span style="font-family: "arial" , "helvetica" , sans-serif;"></span></div>
<span style="font-family: "arial" , "helvetica" , sans-serif;">

</span><br />
<div style="text-align: justify;">
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Guess what? The 61.8% Fib level held, as price bounced there before 
heading back up. If you had set some orders at that level, you would 
have had a perfect entry! </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">A couple of hours after touching the trend line, price zoomed up<span style="font-family: "arial" , "helvetica" , sans-serif;"> </span>bursting through the Swing High. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Aren't you glad you've got this in your trading toolbox now? </span></div>
<div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: justify; text-decoration: none;">
<div style="text-align: justify;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">As you can see, it does pay to make use of the Fibonacci tool, even 
if you're planning to enter on a retest of the trend line. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">The 
combination of both a diagonal and a horizontal support or resistance level could mean that other traders are eying those levels as well. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Take note though, as with other drawing tools, drawing trend lines can also get pretty subjective. You don't know exactly how other traders are drawing them, but you can count on one thing - that there's a trend! </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">If you see that a trend is developing, you should be looking for ways
 to go long to give you a better chance of a profitable trade. You can 
use the Fibonacci tool to help you find potential entry points</span></div>
<h2 style="text-align: left;">
How to Use Fibonacci Retracement with Japanese Candlesticks</h2>
<span style="font-family: "arial" , "helvetica" , sans-serif;">If you've been paying attention in class, you'd know by now that you can combine the Fibonacci tool with support and resistance levels and trend lines to create a simple but super awesome trading strategy. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">But we ain't done yet! In this lesson, we're going to teach you how to combine the Fibonacci tool with your knowledge of Japanese candlestick patterns that you learned in previous lesson. In combining the Fibonacci tool with candlestick patterns, we are 
actually looking for exhaustive candlesticks. If you can tell when 
buying or selling pressure is exhausted, it can give you a clue of when 
price may continue trending. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">We here  like to call them "Fibonacci Candlesticks," 
or "Fib Sticks" for short. Pretty catchy, eh?</span><br />
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Let's take a look at an 
example to make this clearer. Below is a 1-hour chart of EUR/USD. </span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhaY1lpLLCb-dKhQXBpRuPGjzv2-xcnsptWUVnByr3aOT7522EEpkC_TGAKwJY39pGmGj_tf35WFG2HrOCqPts5Y7VxsVhRNUr9c89Nm69T5NZTtCgrRaomYtO0uNWPufa0tjHR8zyODvQ/s1600/grade3-fibonacci-candlesticks-1.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="298" data-original-width="525" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhaY1lpLLCb-dKhQXBpRuPGjzv2-xcnsptWUVnByr3aOT7522EEpkC_TGAKwJY39pGmGj_tf35WFG2HrOCqPts5Y7VxsVhRNUr9c89Nm69T5NZTtCgrRaomYtO0uNWPufa0tjHR8zyODvQ/s1600/grade3-fibonacci-candlesticks-1.png" /></a></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">

</span><span style="font-family: "arial" , "helvetica" , sans-serif;"> </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">The pair seems to have been in a downtrend the past week, but the 
move seems to have paused for a bit. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Will there be a chance to get in on
 this downtrend? You know what this means. It's time to take the 
Fibonacci tool and get to work! </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">As you can see from the chart, we've set our Swing High at 1.3364 on March 3, with the Swing Low at 1.2523 on March 6. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Since it's a Friday, you decided to just chill out, take an early day
 off, and decide when you wanna enter once you see the charts after the 
weekend.</span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEia07O2aReIbCJCc9RBOeGZkLG6U1wRV4zLKIOEbAWR3dVxJF4YbUHifb7_x5w3GNIG0eoy3lIE63GaBw2yyFSGiGGyZUFaONRmQ-fwASR2nn2Zhv_iHBTrK_CWdzu3O1yyRm3ng6qMFd4/s1600/grade3-fibonacci-candlesticks-green-candle-2.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="298" data-original-width="525" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEia07O2aReIbCJCc9RBOeGZkLG6U1wRV4zLKIOEbAWR3dVxJF4YbUHifb7_x5w3GNIG0eoy3lIE63GaBw2yyFSGiGGyZUFaONRmQ-fwASR2nn2Zhv_iHBTrK_CWdzu3O1yyRm3ng6qMFd4/s1600/grade3-fibonacci-candlesticks-green-candle-2.png" /></a></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">

</span><span style="font-family: "arial" , "helvetica" , sans-serif;"> </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Whoa! By the time you popped open your charts, you see that EUR/USD has shot up quite a bit from its Friday closing price. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">While the 50.0% Fib level held for a bit, buyers eventually took the 
pair higher. You decide to wait and see whether the 61.8% Fib level 
holds. After all, the last candle was pretty bullish! Who knows, price 
just might keep shooting up! </span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhcjFotxebRd9pcHTzBs9pDOSKh6_YyqmcHBAaS7Ig5phhKoPACNbZ_sz9apPqgBnzmmB0-EnWA1g8s3H3tOsBWeT0_ziGNO_MNpozwaypVWCffZv9YARM7Qf-HGyrJMlqucUqnXO8Qp18/s1600/grade3-fibonacci-candlesticks-doji-3.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="298" data-original-width="525" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhcjFotxebRd9pcHTzBs9pDOSKh6_YyqmcHBAaS7Ig5phhKoPACNbZ_sz9apPqgBnzmmB0-EnWA1g8s3H3tOsBWeT0_ziGNO_MNpozwaypVWCffZv9YARM7Qf-HGyrJMlqucUqnXO8Qp18/s1600/grade3-fibonacci-candlesticks-doji-3.png" /></a></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">

</span><span style="font-family: "arial" , "helvetica" , sans-serif;"> </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Well, will you look at that? A long legged doji has formed right 
smack on the 61.8% Fib level. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">If you paid attention in <span style="font-family: "arial" , "helvetica" , sans-serif;">candlestick <span style="font-family: "arial" , "helvetica" , sans-serif;">lesson</span></span>, you'd 
know that this is an "exhaustive candle." </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Has buying pressure died down? </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Is resistance at the Fib level holding? It's possible. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Other traders 
were probably eyeing that Fib level as well. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">

</span><span style="font-family: "arial" , "helvetica" , sans-serif;">Is it time to short?  You can never know for sure (which is why risk 
management is so important), but the probability of a reversal looks 
pretty darn good!</span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEig42o7hyphenhyphen9FVn4zax6QLJ4NhmRTg8MsES9fLeY8FjjAjA6se0uo65wl0hsMjDd8htwtnT9JAL0vxXsScNWmjVHgUssLlGBh_Mrzm4fIy3jhJRDfgQMbejvCQ5XFkV2fP0LIaVkSq6kjt-E/s1600/grade3-fibonacci-candlesticks-end-4.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="298" data-original-width="525" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEig42o7hyphenhyphen9FVn4zax6QLJ4NhmRTg8MsES9fLeY8FjjAjA6se0uo65wl0hsMjDd8htwtnT9JAL0vxXsScNWmjVHgUssLlGBh_Mrzm4fIy3jhJRDfgQMbejvCQ5XFkV2fP0LIaVkSq6kjt-E/s1600/grade3-fibonacci-candlesticks-end-4.png" /></a></span></div>
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</span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;">

</span><span style="font-family: "arial" , "helvetica" , sans-serif;"> </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">If you had shorted right after that doji
 had formed, you could have made some serious profits. Right after the 
doji, price stalled for a bit before heading straight down. Take a look 
at all those red candles! </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">It seems that buyers were indeed pretty tired, which allowed sellers 
to jump back in and take control. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Eventually, price went all the way 
back down to the Swing Low. That was a move of about higher level ! That 
could've been your trade of the year!</span> <span style="font-family: "arial" , "helvetica" , sans-serif;"> </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Looking for "Fib Sticks" can be really useful, as they can signal whether a Fib level will hold. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">If it seems that price is stalling on a Fib level, chances are that 
other traders may have put some orders at those levels. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">This would act 
as more confirmation that there is indeed some resistance or support at 
that price. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Another nice thing about Fib Sticks is that you don't need to place 
limit orders at the Fib levels. You may have some concerns whether the 
support or resistance will hold since we are looking at a "zone" and not
 necessarily specific levels. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">This is where you can use your knowledge of candlestick formations. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">You could wait for a Fib Stick to form right below or above a Fib 
level to give you more confirmation on whether you should put in an 
order. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">If a Fib stick does form, you can just enter a trade at market price 
since you now have more confirmation that level could be holding</span><br />
<div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;">
<h1>
How to Use Fibonacci Extensions to Know When to Take Profit</h1>
<span style="font-family: "arial" , "helvetica" , sans-serif;">The next use of Fibonacci will be using them to find targets. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;">A</span>lways keep in mind  - When 
in doubt, know your way out! </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Let's start with an example in an uptrend.</span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;"> In an uptrend, the general idea is to take profits on a long trade at
 a Fibonacci Price Extension Level. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">You determine the Fibonacci 
extension levels by using three mouse clicks. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">First, click on a significant Swing Low, then drag your cursor and 
click on the most recent Swing High. Finally, drag your cursor back down
 and click on any of the retracement levels. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">This will display each of the Price Extension Levels showing both the ratio and corresponding price levels.</span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Let's go back to that example with the USD/CHF chart we showed you in the previous lesson. </span><br />
<br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjffJFnOhbY4kf7cO0seOLRSUAz-r3cu2TyX8enAItlgR4xzGdtl5gDvcdPC13MfN-Qk2V4kdtb32amNHlzct7lqfss2dtlurKteOckfkmGjLJfoTNcowG1Pu41EBMBXn2_gA2E9i5CcFo/s1600/grade3-fibonacci-support-resistance-end-1.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="298" data-original-width="525" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjffJFnOhbY4kf7cO0seOLRSUAz-r3cu2TyX8enAItlgR4xzGdtl5gDvcdPC13MfN-Qk2V4kdtb32amNHlzct7lqfss2dtlurKteOckfkmGjLJfoTNcowG1Pu41EBMBXn2_gA2E9i5CcFo/s1600/grade3-fibonacci-support-resistance-end-1.png" /></a></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">

</span><span style="font-family: "arial" , "helvetica" , sans-serif;"> </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">The 50.0% Fib level held strongly as support and, after three tests, 
the pair finally resumed its uptrend. In the chart above, you can even 
see price rise above the previous Swing High. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">

</span><span style="font-family: "arial" , "helvetica" , sans-serif;">Let's pop on the Fibonacci extension tool to see where would have been a good place to take off some profits. </span><br />
<br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgN8lr-P3xXMlKZ25s7S07R2ATLADnaBm7yMBJ5CXmmnU37n_J3aiUul6CyiUCvFuId-4AISVzubLuOPP-3B3YoStVWmwuuzGI7UZMqusT6QEsZSRM-g7hEylwDVCXpnpLXBwv7PucVvOQ/s1600/grade3-fibonacci-extension-uptrend-end-2.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="298" data-original-width="525" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgN8lr-P3xXMlKZ25s7S07R2ATLADnaBm7yMBJ5CXmmnU37n_J3aiUul6CyiUCvFuId-4AISVzubLuOPP-3B3YoStVWmwuuzGI7UZMqusT6QEsZSRM-g7hEylwDVCXpnpLXBwv7PucVvOQ/s1600/grade3-fibonacci-extension-uptrend-end-2.png" /></a></span></div>
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</span><br />
<div style="text-align: center;">
<span style="font-family: "arial" , "helvetica" , sans-serif;"></span></div>
<span style="font-family: "arial" , "helvetica" , sans-serif;">

</span><span style="font-family: "arial" , "helvetica" , sans-serif;"> </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Here's a recap of what happened after the retracement Swing Low occurred:</span>
<br />
<ul>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Price rallied all the way to the 61.8% level, which lined up closely with the previous Swing High.</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">It fell back to the 38.2% level, where it found support</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Price then rallied and found resistance at the 100% level.</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">A couple of days later, price rallied yet again before finding resistance at the 161.8% level. </span></li>
</ul>
<span style="font-family: "arial" , "helvetica" , sans-serif;">As you can see from the example, the 61.8%, 100% and 161.8% levels all would have been good places to take off some profits. </span><br />
<div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;">
<div style="text-align: justify;">
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Now, let's take a look at an example of using Fibonacci extension levels in a downtrend. </span><br />
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">In a downtrend, the general idea is to take profits on a short trade 
at a Fibonacci extension level since the market often finds support at 
these levels. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Let's take another look at that downtrend on the 1-hour EUR/USD chart we showed you in the Fib Sticks lesson. </span><br />
<br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjFcveifuwRskVLiSIqcmdfExF8W9SYm-NJ9prMQlWGBrTVPc3cF_7W30z_emBHIavuBxqCh-vjdo_LvVhu9ZfHWz97M4U63B5s3e9Ye8mtSCYw5P7Lw3311_nCLhmAgC8GgY1wPKHxDT0/s1600/grade3-fibonacci-candlesticks-end-3.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="298" data-original-width="525" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjFcveifuwRskVLiSIqcmdfExF8W9SYm-NJ9prMQlWGBrTVPc3cF_7W30z_emBHIavuBxqCh-vjdo_LvVhu9ZfHWz97M4U63B5s3e9Ye8mtSCYw5P7Lw3311_nCLhmAgC8GgY1wPKHxDT0/s1600/grade3-fibonacci-candlesticks-end-3.png" /></a></span></div>
</div>
<div style="text-align: center;">
<span style="font-family: "arial" , "helvetica" , sans-serif;"></span></div>
<div style="text-align: justify;">
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Here, we saw a doji
 form just under the 61.8% Fib level. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Price then reversed as sellers 
jumped back in, and brought price all the way back down to the Swing 
Low. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Let's put up that Fib Extension tool to see where would have been 
some good places to take profits had we shorted at the 61.8% retracement
 level. </span><br />
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;"></span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjTy_KplEmNz8LlPv0nosVxe8rg8mZTdau_Edt2nvpNajVQA51XJEFvUIwLwbwYKV4ViCxhYWijESkMrxifde0rcd8FhCKayR8b7-VJn9PsNu_xG1BB3XjVxOUpsZcKNfCNqIhJAuyA0J8/s1600/grade3-fibonacci-extension-downtrend-end-4.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="298" data-original-width="525" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjTy_KplEmNz8LlPv0nosVxe8rg8mZTdau_Edt2nvpNajVQA51XJEFvUIwLwbwYKV4ViCxhYWijESkMrxifde0rcd8FhCKayR8b7-VJn9PsNu_xG1BB3XjVxOUpsZcKNfCNqIhJAuyA0J8/s1600/grade3-fibonacci-extension-downtrend-end-4.png" /></a></span></div>
<br /></div>
<div style="text-align: center;">
<span style="font-family: "arial" , "helvetica" , sans-serif;"></span></div>
<div style="text-align: justify;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">Here's what happened after price reversed from the Fibonacci retracement level:</span></div>
<ul style="text-align: justify;">
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Price found support at the 38.2% level</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">The 50.0% level held as initial support, then became an area of interest</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">The 61.8% level also became an area of interest, before price shot down to test the previous Swing Low</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">If you look ahead, you'll find out that the 100% extension level also acted as support</span></li>
</ul>
<div style="text-align: justify;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">We could have taken off profits at the 38.2%, 50.0%, or 61.8% levels.
 All these levels acted as support, possibly because other traders were 
keeping an eye out for these levels for profit taking as well. </span><br />
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">The examples illustrate that price finds at least some temporary support or resistance
 at the Fibonacci extension levels - not always, but often enough to 
correctly adjust your position to take profits and manage your risk. </span><br />
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Of course, there are some problems to deal with here. </span><br />
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">First, there is no way to know which exact Fibonacci extension level 
will provide resistance. Any of these levels may or may not act as 
support or resistance. </span><br />
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Another problem is determining which Swing Low to start from in creating the Fibonacci extension levels. </span><br />
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">One way is from the last Swing Low as we did in the examples; another
 is from the lowest Swing Low of the past 30 bars. </span><br />
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Again, the point is 
that there is no one right way to do it, but with a lot of practice, 
you'll make better decisions of picking Swing points. </span><br />
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">You will have to use your discretion in using the Fibonacci extension
 tool. You will have to judge how much longer the trend will continue. 
Later on, we will teach you methods to help you determine the strength 
of a trend. </span><br />
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">For now, let's move on to stop loss placement!</span></div>
<h1>
How to Use Fibonacci to Place Your Stop so You Lose Less Money</h1>
<div style="text-align: justify;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">Probably just as important as knowing where to enter or take off profits is knowing where to place your stop loss. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">You can't just enter a trade based on Fib levels without having a 
clue where to exit. Your account will just go up in flames and you will 
forever blame Fibonacci, cursing his name in Italian. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">In this lesson, you'll learn a couple of techniques to set your stops
 when you decide to use them trusty Fib levels. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">These are simple ways to
 set your stop and the rationale behind each method. </span><br />
<h2>
Method #1: Place Stop Just Past Next Fib</h2>
<span style="font-family: "arial" , "helvetica" , sans-serif;">If you were planning to enter at the 38.2% Fib level, then you would 
place your stop beyond the 50.0% level. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">If you felt like the 50.0% level
 would hold, then you'd put your stop past the 61.8% level and so on and
 so forth. Simple, right? </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Let's take another look at that 4-hour EUR/USD chart we showed you back in the Fibonacci retracement lesson. </span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjSTpysOqODihLDgDYBMItkA540HzNrl9kcVxkF45yLyh2yHehZPHVajMO_mRMlAh2TVJZZsKp_32V3jv81BiBU61HCWxIRYDMtXs3XEFtHTy9pDCsBC67xD8sR69XlfViaVX2Oy_r9vRU/s1600/grade3-fibonacci-stop-level.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="298" data-original-width="525" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjSTpysOqODihLDgDYBMItkA540HzNrl9kcVxkF45yLyh2yHehZPHVajMO_mRMlAh2TVJZZsKp_32V3jv81BiBU61HCWxIRYDMtXs3XEFtHTy9pDCsBC67xD8sR69XlfViaVX2Oy_r9vRU/s1600/grade3-fibonacci-stop-level.png" /></a></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">If you had shorted at the 50.0%, you could have placed your stop loss order just past the 61.8% Fib level.</span><span style="font-family: "arial" , "helvetica" , sans-serif;"></span><span style="font-family: "arial" , "helvetica" , sans-serif;"> </span><br />
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">The reasoning behind this method of setting stops is that you 
believed that the 50.0% level would hold as a resistance point. 
Therefore, if price were to rise beyond this point, your trade idea 
would be invalidated.</span><span style="font-family: "arial" , "helvetica" , sans-serif;"></span><span style="font-family: "arial" , "helvetica" , sans-serif;"> </span><br />
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">The problem with this method of setting stops is that it is entirely dependent on you having a perfect entry.</span><span style="font-family: "arial" , "helvetica" , sans-serif;"></span><span style="font-family: "arial" , "helvetica" , sans-serif;"> </span><br />
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Setting a stop just past the next Fibonacci retracement level assumes
 that you are really confident that the support or resistance area will 
hold. And, as we pointed out earlier, using drawing tools isn't an exact science. </span><br />
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">The market might shoot up, hit your stop, and eventually go in your 
direction. This is usually when we'd go to a corner, and start hitting 
our head on the wall. </span><br />
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">We're just warning you that this might happen, sometimes a few times 
in a row, so make sure you limit your losses quickly and let your 
winners run with the trend. </span><br />
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">It might be best if you used this type of 
stop placement method for short term, intraday trades.</span>

<span style="font-family: "arial" , "helvetica" , sans-serif;"> </span><br />
<br />
<h2>
Method #2: Place Stop Past Recent Swing High/Low</h2>
<span style="font-family: "arial" , "helvetica" , sans-serif;">Now, if you want to be a little safer, another way to set your stops 
would be to place them past the recent Swing High or Swing Low. </span><br />
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">This type of stop loss placement would give your trade more room to 
breathe and give you a better chance for the market to move in favor of 
your trade. </span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEho-OhAbh989UgG2xjOTEiKA1asLyLWEV-KaZN5ce0jQWWfLCvRsKjJnWqHmxjwLzYrPs-4EwvTcMCbUjmMinoHWkfGDsONgtqCi19BD0qru6Fi6-QQoNVqnyJC9mIu2hlnYQXsynxChrk/s1600/grade3-fibonacci-stop-swing-high-2.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="298" data-original-width="525" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEho-OhAbh989UgG2xjOTEiKA1asLyLWEV-KaZN5ce0jQWWfLCvRsKjJnWqHmxjwLzYrPs-4EwvTcMCbUjmMinoHWkfGDsONgtqCi19BD0qru6Fi6-QQoNVqnyJC9mIu2hlnYQXsynxChrk/s1600/grade3-fibonacci-stop-swing-high-2.png" /></a></span></div>
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<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">If the market price were to surpass the Swing High or Swing Low, it 
may indicate that a reversal of the trend is already in place. </span><br />
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">This 
means that your trade idea or setup is already invalidated and that 
you're too late to jump in. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Setting larger stop losses would probably be best used for longer 
term, swing-type trades, and you can also incorporate this into a "scaling in" method, which you will learn later on in this course. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Of course, with a larger stop, you also have to remember to adjust your position size accordingly. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">If you tend to trade the same position size, you may incur large 
losses, especially if you enter at one of the earlier Fib levels. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">This can also lead to some unfavorable reward-to-risk ratios, as you may have a wide stop that isn't proportional to your potential reward. </span></div>
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<h2 style="text-align: justify;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">So which way is better?</span></h2>
<div style="text-align: justify;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">

</span></div>
<div style="text-align: justify;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">The truth is, just like in combining the Fibonacci retracement tool 
with support and resistance, trend lines, and candlesticks to find a 
better entry, it would be best to use your knowledge of these tools to 
analyze the current environment to help you pick a good stop loss point. </span><br />
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">As much as possible, you shouldn't rely solely on Fib levels as 
support and resistance points as the basis for stop loss placement. </span><br />
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Remember, stop loss placement isn't a sure thing, but if you can tilt
 the odds in your favor by combining multiple tools, it could help give 
you a better exit point, more room for your trade to breathe, and 
possibly a better reward-to-risk ratio trade. </span></div>
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<h1 style="text-align: justify;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">Summary: Fibonacci</span></h1>
<div style="text-align: justify;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">

</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"></span>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">

</span></div>
<div style="text-align: justify;">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><b>The
 key Fibonacci retracement levels to keep an eye on are the 23.6%,
 38.2%, 50.0%, 61.8%, and 76.4%. The ones that seem to hold the most 
weight are the 38.2%, 50.0%, and 61.8% levels. </b></span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">These are normally 
included in the default settings of any Fibonacci retracement software. </span><br />
<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh3lio8vP8n9scwUokPUiT7JZ7fIXEkzUwJ80mRZ-Hmy_MG0tWU2npJveOa0Pu6onWZdrNY1_DXAxqYsOuE01xFNBpvJe5UiEzFWTxU70d_Su3OJKNcv-swcrU9XQbRnwXKp3a6M1AA4oU/s1600/fibonacci-spiral-768x484.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="484" data-original-width="768" height="125" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh3lio8vP8n9scwUokPUiT7JZ7fIXEkzUwJ80mRZ-Hmy_MG0tWU2npJveOa0Pu6onWZdrNY1_DXAxqYsOuE01xFNBpvJe5UiEzFWTxU70d_Su3OJKNcv-swcrU9XQbRnwXKp3a6M1AA4oU/s200/fibonacci-spiral-768x484.png" width="200" /></a></div>
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">If your trading software doesn't have a Fib tool, no worries - we've got
 a Fibonacci calculator that will do all the work for you! </span><br />
<iframe allowtransparency="true" frameborder="0" height="650" marginheight="0" marginwidth="0" scrolling="auto" src="https://ssltools.forexprostools.com/fibonacci-calculator/index.php?force_lang=56" width="545"></iframe><br />
<div style="width: 450;">
<span style="float: left;"><span style="color: #333333; font-size: 11px; text-decoration: none;">The Fibonacci Calculator is powered by <a class="underline_link" href="https://in.investing.com/" rel="nofollow" style="color: #06529d; font-size: 11px; font-weight: bold;" target="_blank">Investing.com India</a></span></span></div>
<br />
<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Traders use 
the Fibonacci retracement levels as potential <b>support and resistance</b>. </span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Since plenty of traders watch these same levels and place buy and sell 
orders on them to enter trades or place stops, the support and 
resistance levels may become a self-fulfilling prophecy. </span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh7DDu5rPj5A_bkPq2a_j_NnO1TOzRXFSfXLGToMS4Np8UpWQ7tIJI3pOJiv75c_gU_bGugEJ74ZK7m4MvFI8Y1jHnxIb1nFFFQgjeDk53zOXaS_dliCcMEAoIVlCWBrsT5sQQ1po3U8Uw/s1600/summary-fibonacci.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="350" data-original-width="515" height="217" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh7DDu5rPj5A_bkPq2a_j_NnO1TOzRXFSfXLGToMS4Np8UpWQ7tIJI3pOJiv75c_gU_bGugEJ74ZK7m4MvFI8Y1jHnxIb1nFFFQgjeDk53zOXaS_dliCcMEAoIVlCWBrsT5sQQ1po3U8Uw/s320/summary-fibonacci.png" width="320" /></a></span></div>
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<br />
<ul>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;"><b>They key 
Fibonacci extension levels are the 38.2%, 50.0%, 61.8%</b>, </span><span style="font-family: "arial" , "helvetica" , sans-serif;"> as well as the 100%, 138.2% and 161.8% extensions. </span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Traders use the Fibonacci extension levels as potential support
 and 
resistance areas to set profit targets. </span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Again, since so many traders are
 watching these levels and placing buy and sell orders to take profits, 
this tool tends to work due self-fulfilling expectations. </span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">In order to 
apply Fibonacci levels to your charts, you'll need to identify Swing 
High and Swing Low points. </span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">A Swing High is a candlestick with at least 
two lower highs on both the left and right of itself. </span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">A Swing Low is a 
candlestick with at least two higher lows on both the left and right of 
itself. Because many traders use the Fibonacci tool, those levels tend 
to 
become self-fulfilling support and resistance levels or areas of 
interest. </span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">When using the Fibonacci tool, probability of success could 
increase 
when using the Fib tool with other  </span></li>
</ul>
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Fibonacci 14 14. Fibonacci

Fibonacci Who? We will be using Fibonacci ratios a lot in our trading so you better learn it and love it like your mother's home ...