Complex trading system #5 (Fibonacci trading)

Hallo Edward, I have been using this strategy - incorporating trendline analysis - with impressive results so far. I do currently use the 5WMA as filter and was wondering what is the reasoning behind the consideration for using 9 / 10 WMA on the longer time frames?

I thank you kindly in advance of yours.
Regards,
Remlad

Hi Kristian,

with this strategy, if, for example, in a downtrend 32.8 Fib level was missed by a few pips (or more), and the price resumed the downtrend, you have to re-draw Fibonacci levels according to new lows.

Longer time frames can be used as well, although you may re-consider 5 WMA to some 9 or 10 WMA.

Best regards,
Edward

can i use this strategy at the longer time frame?like 1day TF

Hi to all!

Just one question, I don't know it was answered before, but the question is : I'm using this strategy for a while and it is very good, I using it on 15 and 30minutes timeframe, so I wonder : If pair is on a downtrend (or uptrend) and I mark last swing high and swing low, and during the retracement does not touch 38.2 level , but the price few pips below 38.2 continues to fall and crosses 0 line, should i leave the high as it was before as a last swing high and just draw new swing low or should I delete the fibo and draw conpletely new one according to the last swing. I have studied a lot about Fibonacci for past three months and I stay only with fibs, 'cause they are very good.
Thanks for your answer!

Kristian

Hi Edward

Happy New Year.

Thanks for the reply, i will check it out from youtube.

Regards

Edwin

Hi Edwin,

I know it would be great, but at the moment I'm not ready to start with video tutorials, it's too much to take on. Try searching for Fib trading on Youtube, there should be a lot of video lessons to watch.

Kind regards,
Edward

Dear Edward

You have been a great help. Is it possible for you to have a short video on using Fib strategy? so as to allow a new trader like me to further understand this strategy.

Thanks

Edwin

Hi Edwin,

4 hour trend - yes, day trend - not always, although if day + 4h trend agree, it only strengthens the point.

Best regards,
Edward

Hi Edward

Thanks for the comment. understand your point. Btw, when we are using Fib strategy in a 15 mins chart, do we need to follow the overall day trend?

Thanks
Edwin

Hi Edwin,

From the screenshot, Fib levels are good.
Price didn't go all the way to the profit level, but it tried to signal us that it can't reach it, by making a double bottom on the second attempt.
This should have warned us about necessity to tighten the stop, ideally set it to break even +3-5 pips as a reward.
Other than that, if to leave it as is, it worked well, just not in our favor this time.

Regards,
Edward

Dear Edward

I am trying to learn the Fibonacci strategy. I have encountered the attached situation whereby the price does not move in the 'short' direction as hopefull. Kindly advise if I have done the set up correctly?

Thanks

Edwin

Hi Edwin,
SMA might be slightly better, although with such a small Moving Average like 5, the difference is minimal.
What platform is it without WMA?

Regards,
Edward

Hi Edward

Can I use EMA instead of WMA as the platform I use does not have WMA.

Thanks
Edwin

Hi Kiran,

Stochastic, RSI, MACD indicators - they would be helpful first of all during market reversals. For that you have to learn how to identify divergence between price and those indicators.

Stochastic in general is good for spotting a changing momentum in price: when you look to enter on a pullback with Fibonacci levels, by watching Stochastic you can anticipate both time and shifting momentum (from bearish to bullish or vice versa) when Stoch lines start to cross. Kind of a visual, timing reference.

Also if you take Stoch 14, 3, 3 for 3-4 hour time frame of higher, it will help to evaluate pullbacks in terms of trend strength. The rule would be:
- for an uptrend, if during the pullback Stoch crossed above 50 level while never reaching below 50, the trend is running very strong, thus your chances to profit form it are higher in general.
- if, however, during the pullback in an uptrend Stoch reaches below its 50 level, there is a change coming - bears are getting stronger, which is the first a sign of a weakening trend. The uptrend may still continue, but may also not. A deeper pullback will be asking for a look at other, much larger fibonacci wave, most likely on a superior time frame, before we make any decision.

Regarding 300 SMA, I haven't seen this comment, but either way, it is not important, at lest less important than 200 EMA.
The 200 EMA helps to see major trends, if you don't want to trade against major trends, you should use it.

Best regards,
Edward

Thanks Edward,

Should I be looking at additional indicators too? RSI, MACD, Stochastic etc? How important are they in determening whether to enter a trade or not.

What are the most important things to look for, as currently I am breaking even / making a small loss.

How important is the 300sma mentioned either. I really want to learn to master this technique, and would really appreciate any advise you can give to chose the right type of trades.

Thanks again for all your help.

Kiran