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Hourly Fibonacci Method (Day Trading)

  • #301
  • Edited 7:23pm Oct 4, 2009 5:46pm | Edited 7:23pm
Quoting freedomsg
Hi Tunji, nice pic of work. I am following yr post and hope I can learn something from you. I am using Fibo as one of my method to trade too. However, I do not have much time as I need to work in the day. I am using 4 hr TF. Any suggestion for me? Thanks
Thanks freedomsg; the 4 hr time frame is also very good – especially if you don’t have much time at your disposal. Personally, I believe the most important thing is for you to feel comfortable with the primary time frame (as well as the trading method) you’re using, as that would aid discipline, which is one of the most important factors in trading.

To keep this thread simple, only Hourly chart trade setups are discussed. However, regardless of the time frame you choose to trade, the higher time frames analyses on the thread will surely help with your trading decisions. There’re a number of related threads that discuss Fibonacci usage on the 4 hr TF, which you might find helpful; but, if you still want my personal input – beyond the scope of this thread – you can contact me through email. Thanks again freedomsg.

I wish you and everyone a fulfilling week.
  • #302
  • Oct 5, 2009 4:29am Oct 5, 2009 4:29am
On the Daily chart (attached), since late September, price has been having a bullish retracement, in a downtrend. We anticipated that price would travel upward toward the upper edge of the downward or bearish channel before any major resistance. However, the most recent Daily swing high @ 1.0387 (which we've highlighted using the blue broken line) seems to be a strong resistance level that price is struggling to break upward – decisively: In the past couple of trading days, price had formed reversal candle formations (a doji & a quasi railway track) around the 1.0387 level. Consequently, price might be getting set to continue its downward move. To buttress a downward bias, price recently breached Friday’s low @ 1.0308 (not highlighted to avoid cluttered chart). In all, our current bias tends toward a bearish move, but the coast is quite unclear: conservative traders might prefer to refrain from taking trades, for now.

On the H4 chart (attached), price has broken a recent swing low @ 1.0336 (which we’ve highlighted using the blue broken line) downward. That automatically shifts our bias in favor of a downward price move. However, the current H4 price action strengthens our view that the coast is somewhat unclear: price is struggling to stay comfortably below the broken swing low. It would be much preferable to see a clean break before seeking an Hourly Short trade setup.
The white horizontal line @ 1.0435 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, for the more aggressive ones among us, 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. Please 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.
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  • #303
  • Oct 5, 2009 7:00am Oct 5, 2009 7:00am
Quoting Tunji
On the Daily chart[font=Arial] (attached), since late September, price has been having a bullish retracement, in a downtrend. We anticipated that price would travel upward toward the upper edge of the downward or bearish channel before any major resistance. However, the most recent Daily swing high @ 1.0387 (which we've highlighted using the blue broken line) seems to be a strong resistance level that price is struggling to break upward – decisively: In the past couple of trading days, price had formed reversal candle formations...

Nice call Tunji...guess you'll be in by now...i trade mostly on 4hr, daily and sometimes weekly..so i'm looking to short this on the 4hr tf...

Keep the good work going...
God's Love For You Is Sure Never You Doubt It
  • #304
  • Oct 5, 2009 9:04am Oct 5, 2009 9:04am
Quoting D liberators
Nice call Tunji...guess you'll be in by now...i trade mostly on 4hr, daily and sometimes weekly..so i'm looking to short this on the 4hr tf...

Keep the good work going...
Thanks Dliberators, I’m quite aware you usually use the H4 charts for your entries. There’s been no Short trade setups on the USDCHF Hourly chart, so I’m yet to take any trade based on the thread’s method.
  • #305
  • Oct 6, 2009 4:45am Oct 6, 2009 4:45am
Quoting Tunji
Thanks Dliberators, I’m quite aware you usually use the H4 charts for your entries. There’s been no Short trade setups on the USDCHF Hourly chart, so I’m yet to take any trade based on the thread’s method.
Hello Tunji, perhaps i dont have a clear understanding of your entry style yet.. kindly help clarify by my chart.. would you not have gone in at the 61.8/78.6 fib..perhaps i have my fib placed wrongly from how you place yours...

Also wat do u think of EU..i'm watching to go long on the 4hr tf or 1hr tf if there's a retracement.

Thanks for your help....

Victor.
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God's Love For You Is Sure Never You Doubt It
  • #306
  • Oct 6, 2009 5:22am Oct 6, 2009 5:22am
On the Daily chart (attached), as anticipated yesterday, the bulls’ movement has been decisively halted, and price seems to have resumed its long term downtrend. The next major support level, where we expect the bears’ resolve to be tested, is the most recent Daily swing low – also the year-low – @ 1.0178 (which we’ve highlighted using the blue broken line). From a day-trade perspective, there seems to be enough room for us to seek Short trade setups on the Hourly chart – supported by the H4 chart.

On the H4 chart (attached), price has broken the most recent swing low @ 1.0305 (which we’ve highlighted using the blue broken line) downward. That automatically sustains our bias in favor of a downward price move. The white horizontal line @ 1.0357 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. Please 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.
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  • #307
  • Edited 6:45am Oct 6, 2009 6:29am | Edited 6:45am
Quoting D liberators
Hello Tunji, perhaps i dont have a clear understanding of your entry style yet.. kindly help clarify by my chart.. would you not have gone in at the 61.8/78.6 fib..perhaps i have my fib placed wrongly from how you place yours...

Also wat do u think of EU..i'm watching to go long on the 4hr tf or 1hr tf if there's a retracement.

Thanks for your help....

Victor.
Victor, you’re absolutely correct with the 61.8%. There was a nice setup at that level. Actually, I always prefer to go for a confluence that includes the most recent “broken” swing high/low. In the case of USDCHF in question (chart attached), the most recent swing low @ 1.0308 (highlighted using the upper blue broken line) aligns with the 61.8% – and another overlapping fib, & pivot – which made it a valid Short trade setup.
However, with a new swing high just forming @ 1.0272 (highlighted using the lower blue broken line), the Hourly Short trade is no more valid, since the Hourly fib. must be drawn from the most recent swing high.
Price’s move above the most recent swing high automatically violates the lower high, lower low formation, which is one of the basic parameters of the method.

Hope the explanation isn’t too confusing.

Regarding the EURUSD (chart also attached), there would’ve been a nice Long trade setup on the fib. 50%, as it aligns with the most recent “broken” swing high @ 1.4668. However, no suitable overlapping fib.
Besides, I don’t use 50%, primarily because of the reward/risk ratio that is less than 2:1.
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  • #308
  • Oct 7, 2009 5:50am Oct 7, 2009 5:50am
On the Daily chart (attached), as with other higher time frame charts (Weekly and Monthly), it’s very much apparent that we are in a strong downtrend. The bears seem unrelenting. From a day-trade perspective, the scenario is not in any way different: a major support level – the most recent Daily swing low – @ 88.22 (which we’ve highlighted using the blue broken line) has been breached. That price action indicates price is still prepared to move further downward. The year’s low @ 87.10 (not visible on the Daily chart) is currently about a 100 pips away, hence there seems to be enough room for the downward move – again, that’s from a day-trade perspective.
However, let’s be wary of the 88.00 level as it is an area where some institutional traders have “large stop-loss sales lurked.”

On the H4 chart (attached), price has broken the most recent swing low @ 88.61 (which we’ve highlighted using the blue broken line) downward. That automatically sustains our bias in favor of a downward price move. The white horizontal line @ 89.03 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. Please 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.
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  • #309
  • Oct 7, 2009 2:19pm Oct 7, 2009 2:19pm
Hi, Tunji:

I am a newbie in the trading arena. I’ve been searching for effective method of using Fibonacci retracement/extension. Your trading method is very promising. I had read/studied every post in this thread. Thank you very much for teaching me.

On the attached chart (posted 10/07/09), the recent swing high and swing low, from my understanding, are point A (swing high) and point B (swing low). I appreciate if you can point it out the reason for picking the point C as recent swing low.

I am eagerly want to learn. Thanks.
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  • #310
  • Oct 7, 2009 3:38pm Oct 7, 2009 3:38pm
Here is the picture with notation for my previous post.


Thanks,
Dalla
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  • #311
  • Oct 8, 2009 4:50am Oct 8, 2009 4:50am
On the Daily chart (attached), we would observe that the EURUSD is in a very strong uptrend; an uptrend that started around March, this year (2009). Although, the uptrend is still seen as a bullish retracement on the Monthly chart, as far as we are concerned, from a shorter term point of view, we are in a strong uptrend. The bulls resumed their control on Friday, last week, and since then, we’ve somewhat been in a steady upward movement. From a day-trade perspective, we seem to have enough room to still long the pair. We expect price to continue its upward move toward the year high – also the most recent Daily swing high – @ 1.4843 (which we've highlighted using the blue broken line). The 1.4843 is a critical resistance level, hence let’s be cautious as price advances toward it. The 1.4843 level would also, most likely, be supported by the upper edge of the upward or bullish channel.

On the H4 chart (attached), price has broken the most recent swing high @ 1.4736 (which we've highlighted using the lower blue broken line) upward. That sustains our bias in favor of an upward price move. The 1.4843 level (that we've highlighted using the upper blue broken line), which we discussed on the Daily chart, is shown on the H4 chart to give us a clearer view of its proximity to current price position. We have about 70 pips gap, which gives enough room to seek Long trades – from a day-trade perspective; however, let’s still be very conscious of the level.
The green horizontal line @ 1.4649 highlights the most recent swing low, and as long as price stays above it - in the absence of any new and higher swing low - our bullish or upward bias remains intact.

However, we still need our Hourly charts - using Fibonacci retracement levels and important support levels - to seek promising areas to take our Long positions. Price pattern on the Hourly must also be forming higher highs and higher lows. Please note that our aim is to buy a dip in today's up-trend.

Also, PATIENCE is the key here: we need to patiently wait for the Hourly retracement. It might happen, and it might not.
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  • #312
  • Oct 8, 2009 6:12am Oct 8, 2009 6:12am
Quoting dalla
Hi, Tunji:

I am a newbie in the trading arena. I’ve been searching for effective method of using Fibonacci retracement/extension. Your trading method is very promising. I had read/studied every post in this thread. Thank you very much for teaching me.

On the attached chart (posted 10/07/09), the recent swing high and swing low, from my understanding, are point A (swing high) and point B (swing low). I appreciate if you can point it out the reason for picking the point C as recent swing low.

I am eagerly want to learn. Thanks.
Hello Dalla, thanks for your kind words. I determine my swing lows based on a candle with two higher candles (not one) on both sides; and vice versa for swing highs.
If you’re using MT4 trading platform, you can check out the “Fractals” tool: it indentifies swing highs/lows in a very similar way.

P.S.:
Point B was actually the most recent swing low – not point C; it wasn’t very noticeable as the second higher candle on the right was only a pip or two higher; but all the same, it was a mistake. Sorry about that.
  • #313
  • Oct 8, 2009 7:08am Oct 8, 2009 7:08am
Hi Tunji, I enjoy reading yr daily post. I learn a lot from you. I attached the 1 hr chart. Am I rigth to say that I wait till it retrace to 38.2 or 61.8 wait for the confirm candle and go long? The target will be somewhere below the yearly high right? Thanks
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  • #314
  • Edited 7:51pm Oct 8, 2009 6:29pm | Edited 7:51pm
Quoting freedomsg
Hi Tunji, I enjoy reading yr daily post. I learn a lot from you. I attached the 1 hr chart. Am I rigth to say that I wait till it retrace to 38.2 or 61.8 wait for the confirm candle and go long? The target will be somewhere below the yearly high right? Thanks
Hello Freedomsg, I would’ve loved to reply much earlier, but I hope my explanation is still useful. I’ve attached a similar chart to yours, for clearer explanation.

The 38.2% seems nice to me, primarily because of its alignment with a previous swing high @ 1.4736 (highlighted with the lower blue line) and a Monthly pivot. It would have been in line with the thread’s method if there was an overlapping fib. – though the reward/risk ratio would not have been good.
Also, a new swing low had formed @ 1.4741 (upper blue line), which nullified the “most recent swing low” status of the swing low @ 1.4649 (1.4650 on your chart). Based on this thread’s method, you always use the most recent Hourly swing high/low to draw your fib.
Obviously, subsequent price action proved the 38.2% level as a strong support, which is good to know; but, all the same, the parameters for the Hourly Fib. method weren’t fully met.

To answer your profit target question: yes, assuming all the method’s parameters were in place, the profit target @ 127% fib ext. (1.4823) was below the year high @ 1.4843.

P.S.: Confluence @ 38.2% seems more distinct than the one @ 61.8%
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  • #315
  • Oct 9, 2009 3:24am Oct 9, 2009 3:24am
Hi Tunji, thank you for the insight. I learn from u daily indeed. I am working right now, I bought long at 38.2% last night, does it hit the 127% and retrace down. I can only know down to 61.8%. Thanks
  • #316
  • Oct 9, 2009 3:59am Oct 9, 2009 3:59am
On the Daily chart (attached), two days ago – on Wednesday – we identified the 88.00 level as “an area where some institutional traders had “large stop-loss sales lurked.” Although, we didn’t place primary emphasis on it in the analysis, it arguably turned out to be the sole driving force of the USDJPY pair since then. During the very early hours of today, price rallied by almost 100 pips; and currently, the pair has moved more than a 100 pips upward. As a result, price pierced sharply above the steep downward or bearish trend-line. Though price is yet to close above the trend-line (that would be determined after close of today’s candle), its big break above the trend-line – in addition to the strong 88.00 support level – gives us an inkling that a bullish retracement, probably, has started.
We expect the bulls to meet their next major resistance around a major Daily swing low @ 90.11 (that we've highlighted using the upper blue broken line), which might be forming a resistance-confluence with the upper bearish trend-line (the bold red line).

On the H4 chart (attached), price has broken the most recent swing high @ 88.68 (which we've highlighted using the lower blue broken line) upward. That shifts our bias in favor of an upward price move. Price action around the steep bearish trend-line, which we discussed on the Daily chart, is clearer on the H4 chart: we already have a candle closed above the trend-line, and that buttresses our bullish bias. The critical resistance level – a Daily swing low @ 90.11, which we also discussed on the Daily chart, could also be seen on the H4 chart: from a day-trade perspective, we seem to have enough room for further bullish move – although over 100-pip move already made today might restrain any new price rally.
The green horizontal line @ 88.13 highlights the most recent swing low, and as long as price stays above it - in the absence of any new and higher swing low - our bullish or upward bias remains intact.

However, we still need our Hourly charts - using Fibonacci retracement levels and important support levels - to seek promising areas to take our Long positions. Price pattern on the Hourly must also be forming higher highs and higher lows. Please note that our aim is to buy a dip in today's up-trend.

Also, PATIENCE is the key here: we need to patiently wait for the Hourly retracement. It might happen, and it might not.
Attached Image (click to enlarge)
Click to Enlarge Name: USDJPY - H4 091009.gif Size: 27 KB
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  • #317
  • Oct 9, 2009 9:21am Oct 9, 2009 9:21am
Quoting Tunji
Hello Freedomsg, I would’ve loved to reply much earlier, but I hope my explanation is still useful. I’ve attached a similar chart to yours, for clearer explanation.

The 38.2% seems nice to me, primarily because of its alignment with a previous swing high @ 1.4736 (highlighted with the lower blue line) and a Monthly pivot. It would have been in line with the thread’s method if there was an overlapping fib. – though the reward/risk ratio would not have been good.
[font=Arial]Also, a new swing low had formed...
Hi Tunji, what do you mean by "the parameters for the hourly Fib method weren't fully meet? Thanks
  • #318
  • Oct 9, 2009 12:10pm Oct 9, 2009 12:10pm
Quoting freedomsg
Hi Tunji, what do you mean by "the parameters for the hourly Fib method weren't fully meet? Thanks
Freedomsg, I was referring to the primary method discussed on this thread. A few of the parameters necessary to make the trade a valid one – based on the thread’s method – were not in place. For instance, I mentioned the case of no overlapping fib., and a nullified “most recent swing low.”

Please note that that didn’t automatically make the trade a bad trade, it could have been an appropriate trade, based on another method’s necessary factors or parameters.
  • #319
  • Oct 9, 2009 9:52pm Oct 9, 2009 9:52pm
Hi Tunji, thank u. I base on yr analysis on the USD/JPY yesterday, got a few nice pips while I was asleep. Some questions to seek you to answer. Did I go in to the trade late?
.Should I go long once it hit the 61.8 line or I need to wait for the 1 hr candle to close?
.Or I need to wait till the next next candle to go above the previous candle high than I can buy?
.My move yesterday was wait for it to bounce off 61.8 and close above 38.2 then I go long. It seem a little too late.
.I put my tp below the 1.382 below before I go to bed. GMT+8 (Singapore). Was my tp set correctly?
.I am having a problem on when should I go in to buy/sell once it hit the Fib line. Must I go down to lower TF to trigger the trade?
The two blue dotted lines were my buy and tp lines.
Thank you and have a nice weekend Tunji.
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  • #320
  • Oct 11, 2009 10:37am Oct 11, 2009 10:37am
Quoting freedomsg
Hi Tunji, thank u. I base on yr analysis on the USD/JPY yesterday, got a few nice pips while I was asleep. Some questions to seek you to answer. Did I go in to the trade late?
.Should I go long once it hit the 61.8 line or I need to wait for the 1 hr candle to close?
.Or I need to wait till the next next candle to go above the previous candle high than I can buy?
.My move yesterday was wait for it to bounce off 61.8 and close above 38.2 then I go long. It seem a little too late.
.I put my tp below the 1.382 below before I go to bed. GMT+8 (Singapore)....
Hi Freedomsg, sincerely, the issue of entry style is an individual thing. Personally, I don’t wait for any candle formation; I simply place my Limit Order(s) at a certain support or resistance level where I expect price to reverse favorably, get filled automatically, and wait for the s/r level to prove itself.
As you rightly observed, waiting for candle closes or breakouts could sometimes make you enter the trade late, or miss out of the trade completely. On the other hand, if you’re using Limit Orders, you lose the security the candle confirmation provides, as price could trigger your Limit Order, continue rushing downward (assuming you’re going long) to hit your Stop Loss.
So, in a way, it really depends on your personality. I’m very ok with using Limit Order – at times it helps, and at times, it disappoints; but, as you probably know, success in trading isn’t as much of how many winning trades we have, but more of how much confidence (or faith) we have in what we do, and how well we manage our winning and losing trades.

Based on the point you used to draw your fibo. tool, 89.68 is only a few pips below the primary profit target – the fib. 127% ext. @ 89.76, and that isnt too bad, as I believe it’s only smart to take your Long trade profits a few pips below your primary profit target – and not wait for the exact target.

Thanks Freedomsg; and I wish you and everyone a fulfilling week.
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