A quick search through Google will get you the answers on 61.8%, as for the fibonacci way of trading, it works very well for those who use it.
Someone here said it's only proven to work if price reacts right on the level.....why is that?? is that what you have learned so far from trading?
(if it doesn't react right on my level it doesn't work)...bollocks!
Having said that, I'm not a great fibo fan. If I may generalize, I would arrange the commonly used line studies in this (descending) order of reliability: candle S/R (James16 'PPZs'), round numbers, trendlines, pivot levels, and fibos last.
My understanding is that the forex markets are driven primarily by economically based sentiment, expectation of technical self-fulfilling prophecy, heavyweight 'professionals' exploiting 'amateurs', and triangular correlation. Then there's a large degree of apparent 'randomness' due to the diversity and 'anonymity' of the participants at any given point. I can't see how the pattern in a nautilus shell or an Egyptian pyramid has anything to do with any of this. Given all of these aforementioned conflicting drivers, I don't believe that Skunny and his disciples are attaining the 100% win rate that they claim. If it sounds too good to be true.......
If a key fibo retracement level (38.2, 50, 61.8) coincides with some of the other S/R types, then I believe it does no harm to assume that some traders may be watching it, which adds potential weight to the possibility of a reversal in that area. I posted at some length on the topic of visibility here. I also think that Scotty may be spot on when he talks about fibo-based retracements as representing some kind of 'average' profit taking levels. (Good post, Scotty, IMHO
).Just my 2c worth, after doing my darnedest to make sense of all of this wretchedly cryptic stuff for almost 4 years now, LOL. Of course there are only 24 hours in day available for study, and one can't hope to understand every possible nuance, not even in a hundred lifetimes.
