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fibonacci levels - reaction and no reaction

  • #1
  • First Post: Jul 18, 2017 4:39am Jul 18, 2017 4:39am
Sometimes the market reacts to the basic fibonacci levels and sometimes not. What is the reason when the market does not react? How to predict when it is about to react?
  • #2
  • Jul 21, 2017 4:36pm Jul 21, 2017 4:36pm
i think it all has to do with the elliot waves. if you understand trend behaviour and how to apply elliot waves i think it's the best way to combine with fibonacci. i will research further.
  • #3
  • Jul 23, 2017 11:32am Jul 23, 2017 11:32am
It doesn't react because sometimes it has other forces moving it, it also depends on where you draw them.
  • #4
  • Jul 23, 2017 1:13pm Jul 23, 2017 1:13pm
The market of course doesn't always react to fib levels, but it really doesn't have to react every time for you to use your fib efficiently. I often use my fib retracement tool to gauge trend strength. If I saw a strong wave in EURUSD, for example, and if that wave's pullbacks failed to reach even the 23.6 level with the wave continuing, I'd take this as a strong signal to get into the market, I'd try to wait for another pullback to around 23.6. Any pullback beyond the 38.2 should be a warning.

You really don't need a perfect reaction off fib levels, though they do happen semi regularly. This thought gets right to the heart of using leverage, as these and other market events allow one to put on a large position with an extremely tight stop. These are the home-run setups. You'd have to 'miss' several balls, but once you connect with just one of these and then let the market run, well....
  • #5
  • Jul 23, 2017 2:12pm Jul 23, 2017 2:12pm
Quoting Catch-22
It doesn't react because sometimes it has other forces moving it, it also depends on where you draw them.
This ^^^^. That is why you should draw them on the most obviously swing high and swing low points, because that's where most other traders will be drawing them.
  • #6
  • Jul 23, 2017 5:59pm Jul 23, 2017 5:59pm
Fibonacci lines do not match the way the majority of the market is traded. It is just a scheme someone tried to use, but is not aligned to reality. The market moves by large pending orders, not support/resistance. Money has to move no matter where those lines are. Your only hope to achieve success is to attempt to measure momentum against volume. Then hope those tools show you where the market makers switch back and forth between the larger orders. Probability is the better tool for this task. It will center itself on the current price and provide predictions of where X% of the next prices will plot on the graph. Fibonacci would infer the market is recurring, so it cannot follow it. Probability infers the market is moving and creates a piece field for suspected future movement.
You cannot be extraordinary by being normal
  • #7
  • Jul 24, 2017 12:23am Jul 24, 2017 12:23am
I would be more inclined to trust price's reaction to a fib level if the level also had other confluence, for example if the fib level also lined up with a previous swing level, or if the fib lined up right where price pulled back to a broken trendline, or if its a fib level on a lower timeframe when the higher timeframe is already reacting to something on a larger scale.
  • #8
  • Jul 24, 2017 12:48am Jul 24, 2017 12:48am
Quoting Scotty B
The market of course doesn't always react to fib levels, but it really doesn't have to react every time for you to use your fib efficiently. I often use my fib retracement tool to gauge trend strength. If I saw a strong wave in EURUSD, for example, and if that wave's pullbacks failed to reach even the 23.6 level with the wave continuing, I'd take this as a strong signal to get into the market, I'd try to wait for another pullback to around 23.6. Any pullback beyond the 38.2 should be a warning. You really don't need a perfect reaction off fib levels,...
Interesting, Scotty B. I ruled out reacting to levels below 50% (I know, 50 isnt a fib..) until I saw that if price's reaction before the fib pullback was especially thrusty, then 38.2 was a good level for my setups.
I still cant bring myself to trust anything below 38.2.
Something I find about fib reactions is that if the pullback to the fib is thrusty, then I suspect the reaction to the fib will fail.
  • #9
  • Jul 24, 2017 11:22am Jul 24, 2017 11:22am
Quoting waverhythm
Sometimes the market reacts to the basic fibonacci levels and sometimes not. What is the reason when the market does not react? How to predict when it is about to react?
You should watch fundamentals of the pair you want to trade and breathe the market you are trading. The best set up from a fibonacci level in my opinion is after a good fall you will see the price trying to decide what to do, stay below, or above that level and there is the opportunity, I usually wait for a day for the market to show some support around the level.
Looking for profitable short term trades ...|
  • #10
  • Last Post: Jul 24, 2017 7:12pm Jul 24, 2017 7:12pm
Quoting dkrock
Fibonacci lines do not match the way the majority of the market is traded. It is just a scheme someone tried to use, but is not aligned to reality. The market moves by large pending orders, not support/resistance. Money has to move no matter where those lines are. Your only hope to achieve success is to attempt to measure momentum against volume. Then hope those tools show you where the market makers switch back and forth between the larger orders. Probability is the better tool for this task. It will center itself on the current price and provide...
This is only partially true. Fibonnaci levels work simply because people believe they do. There are enough other traders out there trading based on them that they will work sometimes. Just like any other indicator. It's kind of a self-fulfilling prophecy.
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