# Trading With Fibonacci Part 2: Internal Retracements.

There are 3 basic steps to applying the Fibonacci retracement levels to the charts. So this article will discuss the what, where and how to applying these levels. First, for the purpose of technical trading, the Fib levels that we will focus on are the 0.236, 0.382, .50, 0.618, 0.786 and the 0.886. Also, there are a few Fibonacci extensions that will come in handy. Those are the 1.27, 1.382.

I will use two monthly charts, with two different Fibonacci retracements here. On the first chart I will use the retracement from the bearish move that took place between 20007 and 2011. We see the pair nearly took back nearly all of it, confirming a bullish break-up of the 0,886 Fibonacci retracement level at 118,5. I want to be a buyer on USDJPY.

Secondary set of Fibonacci-derived ratios in trading: 0.236, 0.886, 1.13, 2.236, 3.14, 4.236. There are several ways to apply Fibonacci ratios through technical analysis. This includes Fibonacci retracements, projections, fans as well as arcs. Most graphical trading software provides Fibonacci tools. Pros and Cons of Using Harmonic Patterns. Pros.

The Harmonic MT4 Indicator is a trading strategy for the Forex market which is based on Fibonacci retracement numbers. The Harmonic pattern on the MT4 is actually a pattern which comprises of 5 similar patterns: the Gartley pattern, the butterfly, the crab and the bat. These patterns all have the characteristic shape listed as follows: The “W.

These fibonacci price zones attempt to identify the price levels where imbalanced overbought and oversold situations are reversing back to their respective equilibrium level. An ideal reversal usually tests all of the price levels in the Potential Reversal Zone (PRZ) on the initial test.

We see a 0,886 Fibonacci resistance near 118,6, and there is a previous low, a support, around 1116. USDJPY MONTHLY CHART. On the weekly chart, we see short terms SMA (20,40) starting to go down, but long term (100 and 200) are still firmly pointing up. I see it as indicating a bearish correction, but it is too early to say whether the trend is changing or not. Another thing is that the last.

Chapter 2 Fibonacci Numbers 23The Origin of the 0.886 RetracementAlthough the 0.618 and the 0.786 retracement have been utilized in Fibonacci analysis for quitesome time, the introduction of the 0.886 retracement is a relatively new discovery. Although Ihave introduced the ratio on various websites in recent years popularizing its use in theFibonacci trading realm, I am not solely responsible.

Daily Fibonacci 38.2%: 0.8764 Daily Fibonacci 61.8%: 0.8776 Daily Pivot Point S1: 0.8743 Daily Pivot Point S2: 0.8716 Daily Pivot Point S3: 0.8689 Daily Pivot Point R1: 0.8796 Daily Pivot Point R2.

Fibonacci ratios.The Harmonic Traderwas unprecedented in that it was the first material to emphasize the importance of exact alignments and to employ specific ratio combinations that differentiated a variety of patterns. Although The Harmonic Trader outlined the framework of this methodology, Harmonic Trading:Volume One.

For retracement they will be - 0.382; 0.5; 0.618; 0.786; 0.886; 1.0.. So, Fibonacci retracement levels are treated as support or resistance and used by traders for entering or exiting from trades or placing stop orders. There are so many traders using these levels, so they become a self-fulfilling prophecy. The Fibonacci extension levels most time are used as profit objectives - profit.

The price moves up via BC, and is a 0.382 to 0.886 retracement of AB. The next move is down via CD, and it is an extension of 1.13 to 1.618 of AB. Point D is a 0.786 retracement of XA.