Fibonacci in Forex Technical Analysis 5 - Combining Fibonacci and Support Resistance
As we said rebateforex the previous lesson, the use of Forex Rapid Rebate price rebateforexfee cashback forex very subjective However, there are ways to reduce the chances of failing to use the Fibonacci tool Although the Fibonacci tool is very useful, you should not only use this tool to make a strategy Fibonacci tool is like the NBA superstar Kobe Bryant Kobe is the greatest basketball player of all time, but he still had trouble winning ForexRapidRebate award on his own. Lets get started right now! One of the best ways to do this is to use the Fibonacci tool to mark potential support rebateforexbroker resistance levels and see if they align with the Fibonacci retracement levels. If the Fibonacci levels are already resistance and support levels and you use them in conjunction with some other price areas that are also closely watched by other traders, then the chances of a price rally from these areas are greatly increased. Lets look at an example of how to use Fibonacci levels in combination with support and resistance levels The chart below is a daily chart of USD/CHF As the chart shows, USD/CHF has recently been in an uptrend You therefore intend to take advantage of the current trend in USD/CHF to place an order But the question is, when should you enter? (Forex Technical Analysis www.waihuibang.com/fxschool/technical/) So you started to use the Fibonacci tool and selected the January 11 low of 1.0132 and the February 19 high of 1.0899 as the swing lows and highs for the exchange rate Now, with all these Fibonacci price levels deconstructed Now that we have a framework to enhance our ability to find stable entry points, we are now able to answer the question of where you should enter the market. You review the past movement of the currency pair and you find that 1.0510 was a good resistance level in the past and that level coincides with the 50% Fibonacci level. If you set up a buy order around the 50% Fibonacci level, youll be celebrating a bit for that. USD/CHF broke out of the swing high and resumed its uptrend You can also use this trading model in downtrends The point is that you should pick price levels that have acted as resistance or support in the past If you can take this into account, then the chances of price rebounding from these levels will be much higher Why? First, as we discussed in the first year course, previous resistance or support levels will be good areas to buy or sell because other traders will be watching them closely Second, we already know that many other traders are also using Fibonacci tools and they are always ready to enter at these Fibonacci levels Since traders are watching the same support and resistance levels, the number of orders at these levels is bound to increase. Although this does not guarantee that prices will rally from these areas, at least you will be more confident in your trading. Remember, trading is always about probability. If you can take advantage of high winning trades, your chances of winning in the long run will be much higher.