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Fib Experts Answer Please

  • #1
  • First Post: Aug 26, 2007 4:51am Aug 26, 2007 4:51am
Hi,

As we all know that 50% & 61.8% are the most important and strongest Fib levels. To determine whether the current move (on any pair) is a retracement or reversal, which one of these levels must be broken?


Thanks.
  • #2
  • Aug 26, 2007 5:14am Aug 26, 2007 5:14am
Quoting FXHolic
Hi,

As we all know that 50% & 61.8% are the most important and strongest Fib levels. To determine whether the current move (on any pair) is a retracement or reversal, which one of these levels must be broken?


Thanks.

IMO, 50% is not one of the most important. I place much more emphasis on 31.2 than 50. Also, I don't have a strict percentage break to consider a reversal. If you are looking for an entry level based on a percentage of retracement, I think your looking in the wrong areas, but maybe you could work it in as a confirmation.

Your really better off, again my opinion, looking at fib retracement levels as a point where price will bounce then head for levels of fib, extensions.
  • #3
  • Aug 26, 2007 5:24am Aug 26, 2007 5:24am
Quoting Cope
IMO, 50% is not one of the most important. I place much more emphasis on 31.2 than 50. Also, I don't have a strict percentage break to consider a reversal. If you are looking for an entry level based on a percentage of retracement, I think your looking in the wrong areas, but maybe you could work it in as a confirmation.

Your really better off, again my opinion, looking at fib retracement levels as a point where price will bounce then head for levels of fib, extensions.
Statistically, does anyone know the percentage whereby price will bounce off a fib level on its first attempt and subsequent attempts.

This would be really useful information

Dave
  • #4
  • Aug 26, 2007 5:29am Aug 26, 2007 5:29am
Quoting rumbey
Statistically, does anyone know the percentage whereby price will bounce off a fib level on its first attempt and subsequent attempts.

This would be really useful information

Dave

That would be useful information but not completely necessary if you get use to using price action and candle patterns to recognize that it is a bounce. There are also times where you can look at past areas of support/resistance, pivot points, or even psychological price levels that line up with current fib levels to help entry and exit decisions.
  • #5
  • Aug 26, 2007 5:59am Aug 26, 2007 5:59am
agree with rumbey to understand marketswings is key here


revoke
  • #6
  • Aug 26, 2007 6:10am Aug 26, 2007 6:10am
Quoting rumbey
Statistically, does anyone know the percentage whereby price will bounce off a fib level on its first attempt and subsequent attempts.

This would be really useful information

Dave
http://www.forexfactory.com/showthre...=27624&page=36

Look at post #532, you may find this information useful in answering your above query.
  • #7
  • Aug 26, 2007 6:21am Aug 26, 2007 6:21am
I think the first thing to consider when playing fib levels is to first isolate and understand the actual currency pair you are using fibs on. Each currency pair has its own personality, and I find that depending on the pair you play, each has its own "common" fib level. Whatever that level is, you'll just have to draw fibs and see for yourself. After this is determined, then you basically take trades at those common levels, or if you want to be strict about it, take trades at the levels that occur most on retracements or bounces, whatever your strategy is.


Quoting rumbey
Statistically, does anyone know the percentage whereby price will bounce off a fib level on its first attempt and subsequent attempts.

This would be really useful information

Dave
In Charts We Trust!
  • #8
  • Aug 26, 2007 9:10am Aug 26, 2007 9:10am
Extensions, extensions, extensions. GBP loves the 127.
  • #9
  • Aug 26, 2007 9:48am Aug 26, 2007 9:48am
Quoting Dopey
Extensions, extensions, extensions. GBP loves the 127.
Extension on the daily or weekly. Or do you look at it during certain hours. Also wondering if its off of the days high for bull or days low for bear.
  • #10
  • Aug 26, 2007 9:55am Aug 26, 2007 9:55am
Thank you everyone for your contributions.
  • #11
  • Aug 26, 2007 11:48am Aug 26, 2007 11:48am
Quoting goodthings
Extension on the daily or weekly. Or do you look at it during certain hours. Also wondering if its off of the days high for bull or days low for bear.
Weekly, Daily and 4 hour work for me. What works very well is when an extension lines up with a retracement level.

In the recent GBP downmove there was an ABC correction which met a 1.618 extension and bounced off a 38 and 618 retracement. The two retracement points are a confluence of retracements. The addition of the extension creates an Agreement in that they agree that the price has retraced enough by fulfilling an extension and a retracement.

As you probably know, the biggest complaint about Fibs is that people don't know where to draw them from. It's easy to pick one spot, the Focus Number, because it's the high or the low, as in 2.0650 with the GBP. The thing people don't understand is they need to draw fibs from every major pivot and then look for confluence. It works for me.

On the following weekly chart, the Focus number is the high of 2.0650.

The low at 1.9622 is useless because all of its levels have been broken.

The next low at 1.9183 is valid and provides the 62 level.

The low next low at 1.8511 is a major pivot that provided valid levels, but they don't line up close enough to the levels of the next higher low.

The low at 1.8088 provides a 38 level that is within 70 pips of the 62 level at 1.9745. This creates a zone where price may reverse.

The 1.618 extension of the ABC down move comes in at 1.9694, between the two fib levels. This makes this zone a high probability area to look for a reversal.

The next chart is the 4 hour showing the price action. Make your own conclusions about how the price played out once it came down the the zone.
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  • #12
  • Aug 26, 2007 11:53am Aug 26, 2007 11:53am
if price have enough momentum and pierces the 61.8 percent fib level then i will stop looking for a bounce there (if u draw fibs the other way, then it would be 38.2%)

like the gbpjpy, if that shoots up with momentum passing the 618 seen on the daily chart then i would go long. as a major pullback like that normally has momentum to continue.
100% of traders are losers. Just that some win more than they lose!
  • #13
  • Aug 26, 2007 12:06pm Aug 26, 2007 12:06pm
I personally pay attention to 38, 50 and 61, being 50 my favorite. If price breaches the 61 in momentum, I get apprehensive to enter any continuation trade anymore. The 76 level is too far down into the retracement for my taste.
  • #14
  • Aug 26, 2007 12:11pm Aug 26, 2007 12:11pm
Quote
The thing people don't understand is they need to draw fibs from every major pivot and then look for confluence.

Good point
  • #15
  • Aug 26, 2007 12:12pm Aug 26, 2007 12:12pm
Quoting Mr demark
if price have enough momentum and pierces the 61.8 percent fib level then i will stop looking for a bounce there (if u draw fibs the other way, then it would be 38.2%)

like the gbpjpy, if that shoots up with momentum passing the 618 seen on the daily chart then i would go long. as a major pullback like that normally has momentum to continue.
Where are you drawing your fibs from?
  • #16
  • Edited 12:34pm Aug 26, 2007 12:14pm | Edited 12:34pm
I posted this in Jacko's thread a week ago.
http://www.forexfactory.com/showpost...&postcount=636

This is a good example of confluence and a bounce at the support created, that Dopey is talking about, only this is the EURUSD, from the Focus number to two seperate pivots. also note the added support of the trend line. This was a great place to enter a long with a stop below confluence... Very tight stop and huge reward to risk.

Of course Dopey (what a misnomer) is far better at this fib stuff than I am, but that is how I see it.
  • #17
  • Aug 26, 2007 12:30pm Aug 26, 2007 12:30pm
Quoting FXHolic
Hi,

As we all know that 50% & 61.8% are the most important and strongest Fib levels. To determine whether the current move (on any pair) is a retracement or reversal, which one of these levels must be broken?


Thanks.
I have been thinking about this question, I believe that the answer lies in the context of the previous move. For example, if you have a strong move up and then the retracement starts, then if you had some confluence of a couple of fibs from different pivots, one could expect that that area would probably hold. One could reasonably expect that price would bounce there and then continue up.

So I think the decision of whether a fib area is going to reverse or price is going trough it, has as much to do with the context of the market as it does with the retracement itself.
  • #18
  • Aug 26, 2007 12:30pm Aug 26, 2007 12:30pm
Quoting goodthings
Where are you drawing your fibs from?
251.25 - 219.26
100% of traders are losers. Just that some win more than they lose!
  • #19
  • Aug 26, 2007 1:21pm Aug 26, 2007 1:21pm
Well i know that if price goes well above 61.8 fibo level it is consider as a strong move, and the trend may continue, but usually the 61.80 fibo level is either good place for entry or exit from trades....And u got 2 fibos, one is extension, and the other is retracement,

i give u 2 charts, in one u got extension, so i would go long in Down at 61.80 extension or 50retracement more likely( on a small pullback, if any), and long on oil if we break resistance at 23.6 fibo level TP 61.80, but usually extension is used to defined TP in bulish markets.
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its just money
  • #20
  • Aug 26, 2007 1:36pm Aug 26, 2007 1:36pm
Quoting smjones
I have been thinking about this question, I believe that the answer lies in the context of the previous move. For example, if you have a strong move up and then the retracement starts, then if you had some confluence of a couple of fibs from different pivots, one could expect that that area would probably hold. One could reasonably expect that price would bounce there and then continue up.

So I think the decision of whether a fib area is going to reverse or price is going trough it, has as much to do with the context of the market as it does with the retracement itself.
I agree, Scott.

Another factor to consider is the way the price bounces off of each fib. There tends to be characteristics among fib levels as well as pairs. For example, a 38 bounce tends to be sharp and fast, whereas as 68 will bounce around for a bit.
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