Confirmation Signals

Hi all, I would like some advice regarding confirmation signals to use in conjunction with fibonacci retracements.

I'm aware of candlestick patterns and trendline break methods which both work ok but I wonder if anyone can recommend a better approach or at least a more mechanical method to determine that a technical level, such as a fibonacci retracement level, has held?

I mostly trade usd/jpy on a 5 min chart using the 1h chart to give me the bigger picture. I only trade in established trends, ie, when more than one impulse/correction wave has occured.

Thanks

see this
http://www.forexfactory.com/showthre...=149598&page=7

look at this

this is live trade

Hi Zamanib, thanks for your posts.

It doesn't explain in your thread though HOW exactly you decide to enter the market which was my original question.

What method do you use to determine that a fib level has held and you are confident enough to enter a trade in the direction of the trend?

Can we all take a moment to thank Zamanib for another one of his elaborate and concise explanations.

I haven't got any specific answers but here are a few things that you might think about:

Confluence of S/R - Fibs are an afterthought that add weak confluence in my opinion. First thing you should be looking at is what price did last time it was at this level and what implications that might have for now.

Time - certain times of day are more likely to see reversals than others, particularly the opening of each session. Are we in one of them?

Price action - not all pullback set-ups are created equal. There are different probabilities of success for evening star formations (for example) depending on the relative length of bars (ie. the momentum of correction), the time taken to pullback, the relative length of the pullback in comparison to the inital impulsive move etc..

Muliple instrument analysis - take a look at what associated pairs are doing, does the price action confirm or conflict with the instrument you are focusing on is doing? If you're looking to short GJ, but GU and EJ are both above their open ranges - how do you think that might effect the probability of success for your GJ short?

Entry - entering when price has given the first indication that the impulsive move has resumed will offer the least risk and greatest likelihood of banking partial profits when possible, which I have found to be a sensible policy - if you can break even or make a few bucks when you're wrong, you can keep you head above water for the occasional runner that'll make your week/month/year. For me, the first indication is a break of the high/low of the previous candle in the direction of the trend.

Thanks birdt, that's all very sound advice.