On the Daily chart (attached), as a result of a broad dollar rally yesterday, price has broken the upward channel downward. We expect price to continue its downward move for the time being. There’s a support level – the most recent Daily swing low - @ 1.6309 (which we’ve highlighted using the lower blue broken line); Let’s keep this level in mind when managing our trades (in case we eventually identify a Short trade set-up on our Hourly charts – supported by the H4 chart).
On the H4 chart (attached), price has broken the most recent swing low @ 1.6389 (which we’ve highlighted using the blue broken line) downward. From a day-trade perspective, this is a good sign supporting a Short trade. The white horizontal line @ 1.6555 highlights the most recent swing high, and as long as price stays below it – in the absence of any new and lower swing high – our bearish or downward bias remains intact.
However, we still need our hourly charts – using Fibonacci retracement levels and important resistance levels – to seek promising areas to take our short positions. Price pattern on the hourly must also be forming lower highs and lower lows; and note that our aim is to sell a rally in today’s down trend.
Also, PATIENCE is the key here: we need to patiently wait for the Hourly retracement. It might happen, and it might not.
Earlier today, we concluded today’s bias is to go short. The Hourly chart (attached) is currently forming a tradable pattern. Price seems to have bottomed temporarily @ 1.6345. Hence, we expect price to retrace to the area between 1.6406 and 1.6467 (which is the area between the 50% and 100% fib. retracement levels – drawn from the most recent hourly swing high to the current price-bottom). Let’s seek to sell around this area. If price exceeds the 1.6467 level upward, our bearish bias is no more valid and we enter a no-trading zone. Our primary profit target is @ 1.6312 (the 127% fib. ext.). Also, if price breaks below 1.6345 (current price-bottom) before retracing to the sell-area, we’ll have to redraw our Fibonacci tools using a new bottom & the most recent hourly swing high to determine new potential areas to sell. The 15min. chart (attached) gives us a clearer view of the hourly price action and the potential areas to sell (please note it’s advisable to set a Limit order ahead of time as price could move up to these levels and reverse sharply in our favor). This chart is rather cluttered but if we look closely, there are a number of potential reversal levels available. You choose your preferred level based on your personality. fib 50% ret. @ 1.6406; fib 61.8% ret. @ 1.6421; fib 78.6% ret. @ 1.6441. (Personally, the 50% and 61.8% ret. levels are weak compared to the 78.6% ret. level as the confluences at both levels are not as strong as that of 78.6% - I might set my Limit Order just below the pivot @ 1.6437, which is just a few pips from fib 78.6%) Initial Stop Loss @ 1.6469; primary Profit target @ 1.6312 (Please remember to factor in your broker’s pip-spread). Please note that all these Fibonacci (fib.) levels have other pivots, overlapping fibs or previous highs/lows supporting them (they are the cause of this cluttered chart). As such, price could reverse at any of the points. The issue here is that the higher the fib level you choose to sell from, the smaller the pips you’ll risk and the more your pip-profit; BUT, also the more the likelihood of you missing the trade as price might not retrace that high before moving back downward. You need your own discretion here. Please keep your risk low. Don’t risk more than 2% of your capital. Personally, I risk about 0.5% per trade; and each trade has a potential profit target of 1% or more – based on my exit levels. We MUST NEVER assume we KNOW where price is going next! P.S.: Always keep in mind any major news releases. Be wary of possible price volatility during these periods.
(Personally, the 50% and 61.8% ret. levels are weak compared to the 78.6% ret. level as the confluences at both levels are not as strong as that of 78.6% - I might set my Limit Order just below the pivot @ 1.6437, which is just a few pips from fib 78.6%)
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1.6437 area is where I set my limit. There is a pretty good Gartley setup at that level that's within 5 pips of 78.6 retracement level.
In simple terms it's where Fib retracements and extensions overlap. Look for them at S/R areas or Pivots. You can do a Google search for more information. http://www.investopedia.com/terms/g/gartley.asp
In simple terms it's where Fib retracements and extensions overlap. Look for them at S/R areas or Pivots. You can do a Google search for more information. http://www.investopedia.com/terms/g/gartley.asp
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Mike, thanks for the explanation. @ Lefteye & Jeffokes The attached chart might help a bit, but I believe the link Mike posted should clarify it a lot further. You’ll notice that – apart from the major fib (in brown) – there’s a fib in purple drawn in a reverse order; then, its fib 127% ext. and 161.8% ext. levels almost align with the 61.8% ret. and 78.6% ret. levels of the major fib. respectively. The confluence (overlap) is called Gartley.
@ Lefteye & Jeffokes The attached chart might help a bit, but I believe the link Mike posted should clarify it a lot further.
You’ll notice that – apart from the major fib (in brown) – there’s a fib in purple drawn in a reverse order; then, its fib 127% ext. and 161.8% ext. levels almost align with the 61.8% ret. and 78.6% ret. levels of the major fib. respectively. The confluence (overlap) is called Gartley.
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I think I'm having difficulty to even display the chart probably due to heavy traffic...anyway thanks, Tunji.
I use Fxpro mt4,i want to see how I can start trying out using FE but
(1)what I see there is Fibonacci Expansion and not extension,are they same?
(2)I know this is not a tutorial session but I want to learn how to use the tool,can any1 help with where I can get relevant info?And possibly get a custon Fib Extension to install on my platform?
Sorry for bothering you guys,as u can see I am a newbie still demo trading.
I use Fxpro mt4,i want to see how I can start trying out using FE but
(1)what I see there is Fibonacci Expansion and not extension,are they same?
(2)I know this is not a tutorial session but I want to learn how to use the tool,can any1 help with where I can get relevant info?And possibly get a custon Fib Extension to install on my platform?
Sorry for bothering you guys,as u can see I am a newbie still demo trading.
Thanks.
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I don't use any custom Fib extension. You have to add the Fib extension to your FIB Retracement tools. 1.217 level is "-0.27". 1.618 is "-0.618". If you want to see the price next it add %$ to the description tab. Here is a screenshot.
@ Lefteye & Jeffokes The attached chart might help a bit, but I believe the link Mike posted should clarify it a lot further.
You’ll notice that – apart from the major fib (in brown) – there’s a fib in purple drawn in a reverse order; then, its fib 127% ext. and 161.8% ext. levels almost align with the 61.8% ret. and 78.6% ret. levels of the major fib. respectively. The confluence (overlap) is called Gartley.
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Personally I wouldnt consider this a gartley seen that it retrace all the back to the 100 of the down swing.
This is a valid Gartley. The price never broke below 1.6345. At least on my platform.
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On the chart Tunji posted, after the bounce at the 78.6 from the up swing the market rally all the way to the 100(1.6467) of the down swing where he drew the fibs, I dont consider that a Gartley.
On the chart Tunji posted, after the bounce at the 78.6 from the up swing the market rally all the way to the 100(1.6467) of the down swing where he drew the fibs, I dont consider that a Gartley.
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I see what you are saying now. You are referring to the double top. At the time the setup occurred we didn't know the price would go that far. I personally leave my stops at the very least 20 pips away from the up swing. Whether it is a potential Gartley or anything else. The market makers don't care about these patterns. They know where these stops are. It is a shame to miss making a profit for a couple of pips.
The chart posted below is a Gartley pattern by how I was taught. A gartley is a convergence of a fib retracement and a natural fib extension from a smaller swing. The chart below shows the market retrace to the 50 from the major swing in the direction of the trend. In that retracement was a smaller swing that retrace to the 61.8 and then goes to the natural 161.8(0.618) fib extension. Hope that helps.
