All Successful Forex Trader are fortune-tellers. They are able to predict future market prices - either in the short, medium or long term. They can tell you exactly what the market price will be in 24 hours, to the exact pip. So what do these traders do? They have learnt the secrets of Fibonacci Trading.
The Laws of Fibonacci Numbers govern the Forex Market. They are mathematical ratios that keep the market in equilibrium and balance. All experienced Forex Traders know how powerful they are. Fibonacci numbers predict the future. Fibonacci numbers predict where the market will reverse. If you know where the market has been you can know where it will go - with 100% accuracy. A trader is virtually guessing if they do not use Fibonacci tools in their market analysis.
So how does Fibonacci work? The market will wave in an A-B-C-D movement. I call the C-D wave the "money wave". This is the longest and most lucrative leg of the wave pattern. It you ride this wave you are almost guaranteed major profits in the bank. By simply applying Fibonacci tools to the A-B wave, most computerized charting packages will display 5 levels of support for predicted "C" called: 38.2, 50.0, 61.8, 78.6, 86.0. Each of these points potential areas the market will bounce. Also displayed are the "D" extensions called: 1.18, 1.27 and 1.618. If the market bounces at 38.2, 50.0 or 61.8 the market has a tendency to move aggressively to the 1.618 extension. If it bounces at 78.6 the market will reverse at 1.27. If it bounces at 86.0 the market will move to 1.18. The tool is extremely accurate and amazing.
Fibonacci numbers work on all time frames, depending on your trading profile. But for major market reversals and turning points use the Daily or 4 hour charts. Although these time frames take longer for the ABCD pattern to form, they provide exact exit and entry points. However if you are a scalper the 30min, 10min or 5 min time frames would be more suitable. But always be aware that the larger time frame is the roadmap for the market. Smaller time frames have extreme volatility and can invalid some Fibonacci analysis.
Erik Teh
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