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Chapter 10, Part IV. Sometimes Mr. Fibonacci could fail...really.

Discussion in 'Complete Trading Education- Forex Military School' started by Administrator, Jun 16, 2011.

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  1. Administrator

    Administrator Just Administrator :-)

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    Part IV. Sometimes Mr. Fibonacci could fail...really. [​IMG]
    Commander in Pips: Although we’ve already seen how price action can break some Fibonacci levels, let’s take a look at how the market could destroy all of them. Also, let’s discuss how treat Fibonacci levels in general properly. Here we will not apply the advanced retracement method, because it’s not important in current context.

    Pipruit: Ok, that’s interesting.​

    [​IMG]

    Commander in Pips: In general the way of breakout and erasing of level by price has much in common with the same procedure on trend lines and support/resistance levels.

    Commander in Pips:

    Let’s start from the chart that shows how market reacts on supports and how it looks, when some of support levels finally hold market:


    Chart # 1 GBP/USD Weekly. Market has bounced from all levels, but 0.786 was a final support
    [​IMG]

    See – market respects 0.382 First, and then 0.618 and finally 0.786 that has held the market and was the basis for further up move.

    Commander in Pips:
    But, as you understand, that will not happen any time. Sometimes, it could be without any respecting to any level, like it was during financial crisis in 2008:

    Chart #2 GBP/USD Monthly – total crush of all Fibonacci support levels without any respect
    [​IMG]

    But this kind of crashes happens not too often. It needs really important extraordinary and unpredictable events to happen. The more common way of a breakout is as follows. Let’s assume, that you see an excellent thrust down, and you think that entering short in continuation of this move is rather nice idea.

    But which one retracement level to choose for entering? May be 0.382?


    Chart #3 EUR/USD Hourly. Do you want to enter short here?
    [​IMG]

    Pipruit: Well, and why not? Retracement up looks nice – no strong thrusting move to the upside – rather gradual upward move. I think I’ll Sell there…​
     
    #1 Administrator, Jun 16, 2011
    Lasted edited by : Mar 4, 2016
    Hamza Samiullah and fran alvarez like this.
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