Going back in time a little here Ill attempt to try and explain following price with fibs and projecting its next move. If we go back in history Ill pick a starting point and we will follow along with some explanation of what we will be looking for and how I follow along and make the decisions on my trades as I go.
Things of note are when I refer to the fib levels of a fib I am talking about the 38.2/50/61.8 levels. I rename my fib levels to represent what they mean to me and I only pull them or place them in one direction from the high to the low.The reasoning is there is no point to have to wonder which way to pull them under this logic. If price remains above or only retraces to what would normally be the 38.2 the currency is in a long condion, If price moves farther or retraces farther than 61.8 I consider it a short condition. The 50 fib level I consider the balance point between a long and a short condition...hence the renamimg of (Pivot).
If you place a fib on the chart no matter if you draw from top to bottom or bottom to top the 3 main levels of 38.2/50 and 61.8 will be in the same place since they are the inversion of each other and the reasoning behind my renaming them and placing them from top to bottom...it doesnt matter, they are the same measurment in either direction.
Ok in this first example we have the Fib drawn as described before and our fib levels are 1.9768/1.9656/1.9544. These are the points at which you will buy into the uptrend that the fib is drawn on...these are the bounce points. Now if price were to break through them past the Short fib(61.8) we would be switching gears and look to sell rally's instead.
In an Uptrend you buy the dips....In a downtrend you sell the rally's.
Me personally I always draw my fibs on the Daily chart and switch it to the 1 hour to make my trades from.But for the exercise we will stick to the Daily until we get closer to the point in time we are now.
OK now that we have established this first Fib on the Daily the 2nd chart posted shows the action I take, what I will do as each new high is made is start pulling a retracement fib on the Daily, what this shows me is if price will be maintained above its levels for the upmove to continue or if its levels are broken the retracement will continue and I follow it this way as it retraces to the Up moves fib levels for the bounce points.
The 2nd chart begins the progression i go through to follow along with the next fib (retracement).
In the next post I will continue the progression.
Things of note are when I refer to the fib levels of a fib I am talking about the 38.2/50/61.8 levels. I rename my fib levels to represent what they mean to me and I only pull them or place them in one direction from the high to the low.The reasoning is there is no point to have to wonder which way to pull them under this logic. If price remains above or only retraces to what would normally be the 38.2 the currency is in a long condion, If price moves farther or retraces farther than 61.8 I consider it a short condition. The 50 fib level I consider the balance point between a long and a short condition...hence the renamimg of (Pivot).
If you place a fib on the chart no matter if you draw from top to bottom or bottom to top the 3 main levels of 38.2/50 and 61.8 will be in the same place since they are the inversion of each other and the reasoning behind my renaming them and placing them from top to bottom...it doesnt matter, they are the same measurment in either direction.
Ok in this first example we have the Fib drawn as described before and our fib levels are 1.9768/1.9656/1.9544. These are the points at which you will buy into the uptrend that the fib is drawn on...these are the bounce points. Now if price were to break through them past the Short fib(61.8) we would be switching gears and look to sell rally's instead.
In an Uptrend you buy the dips....In a downtrend you sell the rally's.
Me personally I always draw my fibs on the Daily chart and switch it to the 1 hour to make my trades from.But for the exercise we will stick to the Daily until we get closer to the point in time we are now.
OK now that we have established this first Fib on the Daily the 2nd chart posted shows the action I take, what I will do as each new high is made is start pulling a retracement fib on the Daily, what this shows me is if price will be maintained above its levels for the upmove to continue or if its levels are broken the retracement will continue and I follow it this way as it retraces to the Up moves fib levels for the bounce points.
The 2nd chart begins the progression i go through to follow along with the next fib (retracement).
In the next post I will continue the progression.