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Chapter 10, Part IV. Sometimes Mr. Fibonacci could fail...really. Page 3

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 16, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

    Aug 28, 2009
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    Commander in Pips: Well, this is a radical way, that in fact could be applied, but I prefer another one. Our conclusions will have number of points:

    1. Fibonacci levels should be just another tool in our technical arsenal, but it should not be just single one that we rely on;

    2. As with trend lines, the support/resistance levels Fibonacci levels could fail and they do fail very often;

    3. You should combine Fibonacci levels with other tools, that could increase the final probability of a successful outcome on each trade;

    4. Still, the moment of respecting levels by price gives us important chance to success. It allows us to move stop order to breakeven point during the “respecting” move out from the level after the first touch. If you have done this all the time in our example – then you exited from the trades with no loss, even if you’re wrong!

    5. Point 4 of our conclusion tells us, that to open position from Fibonacci levels is safer, than just from “nowhere”, because there is a solid probability exists that the market will respect it and allow us to move our stop loss order to breakeven point. Then, if we are proven wrong – it allows us to exit with no loss or even with small profit. That’s important.

    6. Be careful with treating initial move out from some level as “continuation of initial thrusting move”, because it could be just a respecting of this level after the first touch. The point is that during the first touch the level is strong – that’s why the market could bounce from it initially. But the more often the market touches it, the weaker it becomes.
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