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Fibonacci thoughts & ideas....

  • Post #1
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  • First Post: Sep 11, 2007 8:50am Sep 11, 2007 8:50am
I am starting this thread as I'm aware that there are several 1KT members who have an in-depth knowledge of this method for analysing potential trades.

I am also aware that many think it's mumbo-jumbo, but suspect that's more to do with a lack of appreciation of all the factors that need to be considered.

I also feel this is an area where newbies can be led astray by the hype surrounding this tool, and hope that 1KT members' input will show them how to properly apply Fibs to their charts.

At this point I'll leave the door open before sticking my oar in, as I am probably the least qualified to offer advice.

OK guys/gals, it's over to you.

P.S. I'm looking for generic concepts here, avoiding copyright issues for known trading methodologies.
a nice show of support brought to you byyyyyyyy a small fibonacci cluster

in my opinion they are among the best support and resistance areas and the easiest to identify making them great entries for some trading opportunities
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Peter, I am pleased to see a thread devoted to this topic; thanks for getting us started!

I have been using Fibs in a very basic way as shown in the attached post. However, I would like to know if any traders have experience using Fib Fans? And if you prefer, I will start a new thread for this topic only.
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Interpretation is the problem here. I know I've stayed away from Fibs, thus far, as no two people seemed to agree on how to position them.

So, as Monthly charts are the easiest to start our education, I've drawn some Fibs on the attached Cable chart.

I've numbered them as follows:

  1. From the last lowest low to the most recent high of this complete move (Black)
  2. The (Blue) Fib is the first one that I would have drawn, assuming I'd been in the trade since Sep 2000. It retraced but not as far as the 38 level and then continued up to
  3. The next (Red) high where it did retrace fully to the 38 level areas of move (2) & (3)
  4. Fib (Green) is the current Fib for the last low/high on the Monthly

I realise that there are moves within moves, and not many of us trade the Monthly, but I'm looking to get the basics of a correct approach (or at least some sort of consensus) to how to draw standard Fibs. Visually, it's easiest on the Monthly.

Attached Image
Just as a helpful ramble (and i see BeachBum has the info on his chart's fibo tool) if you wish to have MT4 add the price data to a given fibo level, simply go into the levels tab when selecting the fibo tool at add the following:

@%$ to a given level might look like this:

38.2 @%$ here you have included the fibo percent plus the price data code.

You can flip things around the way you like to see it printed on the chart.

Cheers,
Thom
Quoting accrete
Just as a helpful ramble (and i see BeachBum has the info on his chart's fibo tool) if you wish to have MT4 add the price data to a given fibo level, simply go into the levels tab when selecting the fibo tool at add the following:

@%$ to a given level might look like this:

38.2 @%$ here you have included the fibo percent plus the price data code.

You can flip things around the way you like to see it printed on the chart.

Cheers,
Thom
I have this on my live charts but left them off this one for the sake of clarity, but useful info for those who haven't seen this tip before.
Quoting PeterFM
Interpretation is the problem here. I know I've stayed away from Fibs, thus far, as no two people seemed to agree on how to position them.

So, as Monthly charts are the easiest to start our education, I've drawn some Fibs on the attached Cable chart.

I've numbered them as follows:

  1. From the last lowest low to the most recent high of this complete move (Black)
  2. The (Blue) Fib is the first one that I would have drawn, assuming I'd been in the trade since Sep 2000. It retraced but not as far as the 38 level and then continued up to
  3. The next (Red) high where it did retrace fully to the 38 level areas of move (2) & (3)
  4. Fib (Green) is the current Fib for the last low/high on the Monthly

I realise that there are moves within moves, and not many of us trade the Monthly, but I'm looking to get the basics of a correct approach (or at least some sort of consensus) to how to draw standard Fibs. Visually, it's easiest on the Monthly.

Peter, if I misunderstand you, then please correct me. I understand your post to read that you believe the Fibs with the highs at 1.9145 and 1.9549 are still valid. They're not. The only valid Fibs here are ones that are drawn from the high at 2.0652.

Using that high as the focus point, there are 7 fibs that are valid, only 5 worthwhile. There isn't a fib confluence within 200 pips of those 5 fibs though.
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Dopey, Damnit, I do not want to address you by that name... LoL

That is a very nice spread sheet. I think I will write one myself just like it, The way you have it layed out is just perfect... I hope you do not mind.

thanks for posting that.


Peter
I think what Dopey is saying is there can be only one Focus point all the other valleys in your chart are pivot lows. All the other peaks you have used for a focus are obsolete and replaced by the highest focus point.
After I posted the chart, and reread the post, I realised that I'd posted it and made it sound like a tutorial.

Absolutely not! As I posted it as a sample of how a chart could be drawn, and possibly mis-construed, I actually wanted the sort of feedback you've given me.

This was my point, really. Many of us draw Fibs all over the place, and think Ahh confluence (not talking about Jim here) but most of the time we might as well throw darts at the chart and trade wherever they stick in.

I want this to be an educational thread, that will guide us newer folk into the paths of righteousness. Criticism is welcomed, dare I say encouraged!

If the core methodology of selecting Fibs can be fine-tuned on a monthly chart, with relatively simple moves, then as we move to shorter time-frames we can, maybe, see where the true levels hold.
Dopey eluded to something that is key. To end right you need to start right. While every peak and valley can provide some level of harmonic proportion, you end up chasing your tail when things don't work out by the book.

I posted some fib stuff in a different thread that goes into it a bit more: http://www.forexfactory.com/showthread.php?t=44558

Obviously, it can get complicated and I think this thread is about simple. So my simple tip is to double check against a higher time frame. Start on a lowest low or highest high. Then look in the past for a swing of similar proportion and use that as the guide adjusting for any current moves that may help define the current structure. Cluster only against other moves that have a highest hight and a lowest low. I don't think clustering every minor swing does much good other than make a mess, but your mileage may be better than mine.
Ok I started again. I take it that I've drawn the chart as you called it.

Any previous high (on which you based a FiB) is invalidated by the next high. You'd then redraw the Fibs up to the new high, etc.

When any previous retracement is taken out by a deeper retracement (ie the low takes out any previous low) that then becomes a new starting point for new set (Fib 4).

I think the point I'm asking is what's the point of Fib (1) if Fib (4) is valid, unless I mis-understood Scott & Dopey
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Quoting JR97
I posted some fib stuff in a different thread that goes into it a bit more: http://www.forexfactory.com/showthread.php?t=44558
I checked out the Bryce Gilmore stuff as soon as I saw your original post, but as I can barely draw a proper set of Fibs yet I felt that stuff was going to be beyond me.

Thanks for the input
some creativity

sort of after the fact
but
seems like the fibo fan, fibo retracement and a fibo timezone formed a cluster right where price is sittin at right now
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  • Post #14
  • Quote
  • Last Post: Sep 11, 2007 10:12pm Sep 11, 2007 10:12pm
Quoting PeterFM
I am starting this thread as I'm aware that there are several 1KT members who have an in-depth knowledge of this method for analysing potential trades.

I am also aware that many think it's mumbo-jumbo, but suspect that's more to do with a lack of appreciation of all the factors that need to be considered.

I also feel this is an area where newbies can be led astray by the hype surrounding this tool, and hope that 1KT members' input will show them how to properly apply Fibs to their charts.

At this point I'll leave the door open before sticking my oar in, as I am probably the least qualified to offer advice.

OK guys/gals, it's over to you.

P.S. I'm looking for generic concepts here, avoiding copyright issues for known trading methodologies.
Hi Pete, My name is Bill & I'm a FibFreak. HOWEVER...
Like the search for the Grail, I believe, we have yet to discover Time 0{Zero} Which [I believe] is critcal to ALL Fib Calcs.
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