Fibonacci Extensions

You might also use Fib for finding targets.

In an uptrend, you use the Fibonacci Extension tool to determine where your target might be. To use the extension you need 3 points.
First, you need a significant Swing Low, then the most recent Swing High. Finally, any of the retracement levels.

Let's take a look on the daily USDCHF here. 
Former resistance turned support at 1.0510 held nicely
The 50.0% Fib level held strongly as support and,  three tests later, the pair finally it returned to move higher. You can see that it broke the last resistence of the swing (redline).
Now lets see what the extension would look like, if we put that on.
Fib extensions help us spot potential take profit points

If you take a look on the levels you can see that it almost testet EVERY level. Ok to be honest that wont happen all the time but it testet 0.618, 1, 1.5, and 1.618. So depending how aggressive you wanna trade, you could choose one of those.
And oh wonder, it also works on the downtrend ;).
Buyers could not break through the 61.8% Fib. Sellers jumped back in and brought price back down to test former lows
So lets put the extension on, thinking the downtrend will continue. The 38.2%, 50.0%, and 61.8% extension levels would have all been good places to take profit
And again. Profits would have been good ad 38.2%, 50.0%, or 61.8% levels. All these levels acted as support, possibly because other traders were keeping an eye out for these levels for profit taking as well.
But dont think this is the holy grail to money and fortune.First, nobody knows to wich extension it will move and in what time.
Second is that you have to choose a swing low. Some people might not pick your swinglows.
You will have to use your discretion in using the Fibonacci extension tool. You will have to judge how much longer the trend will continue. Later on, we will teach you methods to help you determine the strength of a trend.

Go and try it out in your demo account ;)

Penulis : KalOo ~ Sebuah blog yang menyediakan berbagai macam informasi

Artikel Fibonacci Extensions ini dipublish oleh KalOo pada hari 13 September 2011. Semoga artikel ini dapat bermanfaat.Terimakasih atas kunjungan Anda silahkan tinggalkan komentar.sudah ada 4 komentar: di postingan Fibonacci Extensions
 

4 comments:

  1. Looks pretty interesting, I might reread previous post so I can totally get it

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  2. i love to use them, best instrument i guess!

    ReplyDelete