This method has been popular on some websites and there are also many people trade using this strategy. The idea of this trendline breakout with fibonacci is when price break a trend line, we wait until it break 100 Fibonacci level and the target is the next Fibo level.
Its a good trading strategy but the main problem is the stop loss. The stop loss is quite large. But its very accurate if we do it in correct manner. See the example below.
The black thick line is showing current down trend of EURJPY. The idea here is to trade along with the trend. The blue thin line is the trend line to catch the trade. On a down trend, we look for SELL position and we wait the price to retrace up. Then, we draw a trend line connecting lows (blue line). When price break this trend line, theoretically it will continue to move down ward.
Next is to draw the fibonacci on the break out area. See how to draw the fibonacci below.
Draw the fibonacci from higher low to the lower high (see above illustration). Open SELL or simply put a pending order below 100 level fibonacci. The target should be placed on the 161.8 level and the next level also could be reached on a strong trend. I highly recommend to use the 161.8 as the target since the next level sometimes not reached.
This strategy works best on hourly time frame. Lower time frame not recommended. Also it can be used on any pairs.
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