Educational guide on using Fibonacci method. Free Forex Fibonacci tutorial
Next logical question:
Which currency pairs don't normally follow Fibonacci and which do?As we mentioned, some pairs aren't very "friendly" to Fibonacci sequence. The only suggestion here would be to avoid trading such pairs. Sometimes it is temporary...
From our observation, USD/CHF is the least obedient pair. Then, unfortunately, EUR/USD has a lot of surprises for Fibonacci traders: Again, this is our point of view.
Is there any suggestion for Fibonacci trading when the market moves sideways?First of all, when the market is trading sideways there is a very little chance to get rewarded, but there is a huge chance to sustain additional losses. Therefore, no Fibonacci should be applied in sideways market.
Instead, traders should draw two trend lines above and below the price trading range (trend lines will show support and resistance levels) and then place orders when the price breaks out of this levels. That is the only way to trade sideways moving market.
If Forex traders are determined to find a trend, they should switch to a larger time frame.
I still have troubles finding Swings High and Low (A and B points) to draw Fibonacci on...If you take a group of traders and give them the same chart to define Fibonacci levels you will discover that there are many opinions on where exactly to place Fibonacci study.
Our goal is to find the approach that would be used by majority of Forex traders. This skill comes only with practice.
However, to help you now in your first efforts to define AB swings, lets use couple of tricks, or rather eye guiding tools.
Tool number one will be Stochastic indicator — set full or slow Stochastic with settings 5, 3, 3 or 14, 3, 3, whichever works best for you and use Stochastic lines crossover to find tops and bottoms. E.g. when Stochastic lines cross, mark this point on a bar chart, around this level we will have our Swing High or Swing Low.
Tool number two is Heikin-Ashi candlesticks. Simply switch your charts to display Heikin-ashi bars instead of regular candlesticks. If you don't have such option on your Forex trading platform, use another one from a different broker, for example, Oanda or FXSolutions.
Forex trading is a high risk investment. All materials are published for educational purposes only.