FOREX Daily Fibonacci Strategy

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The Fibonacci sequence of numbers refers to an ancient system of numbers that that were explained and published by Leonardo Fibonacci in 1202. Fibonacci numbers refer to the relationships that exist between all number patterns and are found throughout nature. The golden ration of the Fibonacci sequence determines ratios of the universal number pattern and is therefore often useful in predicting patterns such as those found in the stock market or in foreign currency exchange. Using Fibonacci numbers for daily Forex trading can often be lucrative if done properly.

Getting Started

1. To use the Fibonacci strategy as a daily Forex trading tool, you should allow for a three to four hour time frame. You will need the Fibonacci tool that comes with most charting packages as this will assist you in finding the crucial high and low patterns and the crucial 50 percent retracement level. Also necessary for determining patterns are EMA 100 charts, SMA 150 charts and RSI (14) on a daily chart. You can use any high/low value currency pairs with this sequence. You will not be setting a profit target as the sequence earns profits through a natural pattern of numbers and an exact number is not predicted, only the guarantee of a rise and fall. To avoid the fall that occurs after the rise you will need to set a default stop loss at around 100 pips which you can later adjust according to the most recent swing.

Rules

2. To begin trading find the area on the chart closest to the current price wave that has a distance from high to low over 100 pips. Use the Fibonacci tool on the wave no matter if it is going up or down. Once you have applied the tool you should wait for the price to enter an area that falls between .382 and .618 retracement levels. These levels are always numbered from the bottom to the top regardless of the chart pattern and you should not attempt exchanging until your price enters this range. You should go short if a full candle is closed below the .250 retracement level. If you are already long at this point you need to close the position and exit. You would go long if a full candle closed above the .750 retracement level. If you have maintained short positions up until this point you will need to close them and exit. You should also note that once the pattern has completed another wave greater than 100 pips will occur and you will need to reset the Fibonacci tool on the new wave.

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