I thought it was about time I caught up on the great work going on with HGI and really enjoyed trying out these templates, scripts and indicators. A big thank-you to everyone who contributed to these - I'm sure I'll be doing more manual trading with HGI!
Monday's can be a dodgy day to trade so I'd like to share something (for those relatively new to trading) that helps clarify important price continuation-reversal levels. Usually there are some easy to find Fibonacci levels which coincide with important support and resistance levels. To begin with, yesterday's High and Low are a good starting points. If price goes beyond yesterday's extreme then consider the previous week's extremes. If yesterday's extreme spills over into today then try another set of Fibo.s from yesterday's (say) high to today's recent low.
The chart can get a bit crowded but where bunching of lines occur it can be an area to avoid entering a trade and might be better to wait for price to move out of these areas. On the other hand if price steps cleanly from one Fibonacci level to another with obvious support that can be a great place to enter.
Sometimes it is possible to link several candle tops and bottoms with trend lines which also intersect the Fibonacci levels. When these trend lines form a triangle which intersects near a Fibonacci level then there is often a genuine breakout. Hopefully this will be come clear on the chart below:
Using-Fibo-TrendLines-with-HGI-26Jan15.png
'A' is when price has broken out of the blue triangle formed by a pair of blue trend lines. There is one H1 bar which opens and closes above the red Fibonacci level which I would use as a pre-breakout event, then the next H1 bar opens, goes down a bit then goes up again, passes the H1 open price. This is when I consider the breakout to be confirmed and safer to place a buy trade which is going against strong longer term downward trend.
The trade needs to be long enough to justify the cost of entering but short enough not be caught going the wrong way against the prevailing trend. So I have labelled 'A' as the entry point and 'B' as a good place to take profits (just before Fibonacci level), and a stop-loss around where HGI has drawn a white line is a good place for an initial stop-loss. When price arrives at two bunched Fibonacci levels and the MA60 there is chance of a spike down in price, so one could take partial profits or move the stop-loss under this bunch of lines.
Every time there is a bar close, open, high and low there is also a corresponding Fibonacci set. The levels from MN1 , W1(-1) and W1(-2) are often very important as well, but to avoid analysis-paralysis I start with yesterday's Fibonacci and if there is price-level where candles are hugging a particular price-level but the current Fibonacci set doesn't include this level then I look for a another set of Fibonacci levels which includes the invisible support/resistance level.
My principle aims of using Fibonacci levels are to
a) improve the timing of entries
b) confirm the current price swing direction
c) have the smallest safe stop-loss
d) find profit levels to exit or take partial profits |
