How to build Fibonacci levels and apply them in your trading? Fibonacci lines, how to use them? Video - correct construction and use of Fibonacci lines for Forex strategies

Greetings, readers of my blog! Today we will touch upon such an unusual topic as the formula for beauty and perfection in trading. Most traders are unlikely to be able to briefly and clearly explain why stock charts once captivated them. But they contain the same patterns as flowers, snowflakes and the bizarre curves of sea shells.

These patterns are known as the “golden ratio” and their discovery belongs to the Italian mathematician Leonardo Fibonacci (by the way, I already briefly described the Fibo series in the material about). Therefore, today we will talk about it in more detail. So, Fibonacci lines and how to use them in stock trading.

To understand the mathematical meaning of Fibonacci lines, you need to remember what a series of Fibonacci numbers is. This is a number sequence in which the first 2 numbers are 0 and 1, and each subsequent number is equal to the sum of the previous two.

The ratios between the numbers in this series are periodically repeated, but the ratio 0.618:0.382 is especially important. The beauty is that 0.618:0.382=1:0.618=1.618. The whole relates to the larger part as the larger part relates to the smaller. This is the “golden ratio” and it is very often found in nature, as well as in various statistical patterns.

In trading, this pair of numbers usually limits the interval within which the price can complete a correction. In other words, during a correction, the price can travel a distance from 38.2 to 61.8% of the previous movement along the trend, after which the trend will either continue further or change to the opposite one. Between these boundaries, another reversal level may be the 50% mark, although in the Fibonacci series this ratio occurs only once (1:2).

There are also corrections with a depth of 23.6% and 76.4%, but relatively rarely. If, upon completion of the correction, the price resumes its movement along the trend, extended Fibonacci levels (over 100% of the previous trend wave) help to identify possible targets.

Be richer - trade Fibonacci!

For a detailed introduction to the topic of trading using Fibonacci levels, the book “Fibonacci Levels: Where the Money Is” by A. Kiyanitsa and L. Bratukhin is perfect. We will limit ourselves to practical examples on MetaTrader 5 and lightly touch upon.

Constructing Fibonacci lines in the MT5 terminal is very simple. Suppose we need to enter a trade along the trend, using a correction to find a suitable level. To do this, in the terminal, open the menu item “Insert – Objects – Fibonacci Lines” and, with the left mouse button pressed, draw a grid of lines from the level of the beginning of the trend to the beginning of its correction.

Assessing the current situation as a correction is often subjective, but usually if the price on the grid breaks through the 23.6% level during a rollback, we can talk about a full-fledged correction. Therefore, trading at correction levels is risky (the power reserve may be very small), but preparing for the continuation of the trend, on the contrary, is much more convenient.

In this example, the price reaches the correction level of 61.8% (which does not happen very often), reflecting from it with amazing accuracy. As you can see, the levels of 38.2% and 50% were confidently broken, so opening a sale from them looked risky.

So, the correction is over and you can count on a good profit if you sell. But how to estimate the margin of a downward movement? And here Fibonacci levels come to the rescue, but as the so-called. extension. You can build it by setting aside the grid from the beginning of the correction until its completion. Then, below the start level, there will be additional levels of 161.8%, 261.8%, etc.), which can be considered potential targets for trend movement.

In our example, the first attempt to reach the 161.8% level was in January 2012, but it ended in failure, followed by a new strong correction. However, in May 2012, the target level of the downward trend was still reached.

It is psychologically difficult to keep an open position when the price goes in the opposite direction for a long time. To do this you need to have self-discipline skill. Sometimes it is more profitable to trade with a moving stop and re-opening a position along the trend from a new correction.

For this reason, Fibonacci levels are rarely used as an independent indicator. As a rule, they serve as a good help for determining levels, but signals to open a position are obtained using additional indicators.

With Fibo and BO – not weak!

Application of Fibonacci lines in binary options almost no different from regular trading. For example, if the price broke through the correction level of 23.6% and consolidated above it, then with a very high probability the level of 38.2% will be reached. Here it makes sense to buy a “one-touch” option with an expiration date so that the price has time to reach this level, and further price behavior does not matter.

The choice of the “up/down” option is justified when the price has reached a correction level of at least 38.2% and fought back from it by closing the candle. Of course, a deepening of the correction and even a trend reversal is possible, but there are 1-2 candles in stock, so if the price has not moved too far from the rebound level, you can buy an option with an expiration date within 1-2 candles of the current chart and direction in the direction of the rebound. Below I have prepared a video with a practical example:

It is very important that Fibonacci levels serve as a more accurate guide, the longer the chart period is selected. On the 1 and 5 minute charts, the concept of a trend does not make sense, so turbo options require a different approach.

Afterword

Despite all the clarity and convenience, Fibonacci lines are not very often used at high automated market Forex, because it is not particularly technical from the point of view of classical analysis.

Where the role is much higher human factor. Largely due to this, traders who prefer a technical approach are switching to it. Subscribe to my blog news, study, think and make decisions worthy of professionals!

P.S. While I was preparing the article, I became interested in the phenomenon of the Fibonacci series itself. It turns out it’s everywhere, I’ll even make a gallery below so you can see :)

Golden ratio in a seashell Golden ratio Fibonacci Looks like cats know about fibonacci too :)
Pigeons also sit in accordance with the principle:) Donald Trump also complies with the rule:) The golden ratio can be seen even in a hurricane from a satellite...

What is the most objective factor in the market? Price, right. But her objectivity is lost in the chaos of her movement. And no indicator can fix this. But many are trying to make price movement natural, understandable and predictable.

Elliott tried to give price fluctuations the natural character of waves. It's cool, but... I can't find the words. Someone, I don’t know who, decided to use “mystical” numerical ratios in trading in order to place the market within human-understandable boundaries. And these relationships were noticed and described by the mathematician Fibonacci back in the 12th century. And miraculously, they are regularly found not only in human life, but also in nature itself.

Among all Fibonacci tools, I bring to your attention two - correction levels and extension lines. Who else but swing traders who trade pullbacks can tell you how to use Fibo in detail, informatively and interestingly.

Article outline:

Description and essence

Correction and extension lines represent horizontal levels on the chart, which are percentages of the magnitude of the price movement. Usually, they are built according to the trend, but during its correction. What they are tied to and what they mean, read on.

A small but entertaining backstory. Leonardo of Pisa, nicknamed Fibonacci, is an Italian mathematician, please note, from the 12th century. Traveling a lot, he became acquainted with the Indo-Arabic numeral system. He popularized it in Europe by publishing The Book of Abacus. Today, children all over the world are using abacus to develop their intelligence very effectively.

In the book, Leonardo described a series of numbers, which is subsequently known to us as the Fibonacci sequence. The essence of this sequence is that each next number is equal to the sum of the two previous ones:

0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610 and so on ad infinitum.

There are interesting numbers relationships in the Fibonacci sequence:

The ratio of the previous number to the next one, like 5 and 8, will always be approximately 0.618. And the ratio of the previous number to the number after one, like 5:13, will be about 0.382.

If the denominator and numerator are swapped, the ratios will look like: 1.618 and 2.618.

The essence of Fibonacci levels in technical analysis. The ratios of 0.618 and 0.382 are the main lines in the correction and extension levels. Somehow it turns out that the price wave most often corrects by 61.8% or 38.2% of its range and then continues to move to 161.8%. See how it looks graphically:

Another important level is 50%. It is not a derivative of any ratio of numbers from the Fibo sequence. This is simply an important gap between the two previous lines.

Other Fibo tools in technical analysis. In addition to the indicators that we consider in this article, there are others, also based on Fibo numbers, and named after him. These include:

1. Arcs,
2. Fan,
3. Time zones.

Importance and Opportunities in Trading

Golden ratio. A ratio of 1.618 or its opposite 0.618 is called golden. Why? In any area of ​​life, nature, art and other things, these numbers are mystically noted. And in trading too.

In trading, Fibonacci, as for me, serve rather as levels that everyone knows about and, like it or not, are guided by. But the law is simple:

Any trend has a much greater chance of continuing during a rollback than of reversing.

Therefore, where this pullback ends at 0.382 or 0.5, or maybe 0.618 is not so important. Moreover, there is no such thing that the Fibo lines work out penny for penny. There is nothing even close.

Basic and additional levels. Based on the relationships mentioned above, the main lines are constructed. But there are also additional ones:

• 23.6% or 0.236– this is the ratio of the previous number and the number through 2 values, for example, 5 and 21;
• 78.6% or 0.786 is the square root of 0.618.

Interestingly, the value 0.618 is also the square root of 0.382. In general, this sequence of numbers is very mysterious, even mystical.

The benefits of Fibonacci lines for a trader. Let's summarize some intermediate results:

• Levels of correction and expansion suitable for trend work, but trading on pullbacks;
• Recommended Market: any, even stock, Forex or urgent;
• The best tools: stock, currency pairs, futures and others;
• Recommended time frames: from minute or hour to daily or weekly;
• The end of the correction occurs more often in the range of 38.2% - 61.8% on the magnitude of the trend wave. Less often by 23.6% or 78.6%.
• Expansion lines will tell you what to expect from the next wave. Typically, it rises to 161.8% or even 261.8%.

How to build Fibonacci levels and extensions

Traders are looking for answers to constant questions:

1. In general, what is correction? How to look for them, recognize them, etc.?
2. When the first question is clear, sooner or later another one arises: where is the border between a correction and a completely different trend?
3. Where to start stretching the grid: from the beginning of the entire trend or the last wave? Where does the trend actually start?
4. The eternal dilemma: build a grid based on highs and lows (candlestick shadows) or based on closing and opening prices?
5. How to draw these levels and extensions? Where to click, what to choose?

Before we get into the answers to these questions, remember one thing:

Fibonacci lines are a subjective tool.

Basically, like any other, except for the price. Subjectivism is a condition that you just need to accept, and not expect that reversals should occur at some point-to-point Fibo level.

How to recognize a correction? Its synonym is the word familiar to you - rollback. Any trend cannot constantly move in one direction; it needs pauses. Two steps forward, one step back. On the graph it looks like steps up or down.

The website has a separate article on this issue - “ Trend retracement as a model and trading principle“I recommend reading it.

To recognize a swing correction, the trader uses two moving averages - 10 SMA and 30 EMA.

• If the price enters the space between them, it is a pullback;
• If the price is not in them, this is also, perhaps, a rollback, but not the one we need.

It's that simple. We work on this principle.

Another correction or another trend? You will hear and see different things, for example, if the price is adjusted according to Fibo levels of more than 61.8%, or 78.6%, or some other values, then this is no longer a rollback, but a new trend.

Don't be so quick to believe it. Charles Dow defined a trend quite clearly - it is a series of rising or falling highs and lows.

We consider a new trend only if the price corrected more than 100% of the previous movement and the candle closed lower.

Where to set Fibonacci? From the beginning of the last wave. If you hit the first pullback after a trend change, then only from its base.

The easiest way to determine the beginning of a new trend is by the intersection of moving averages with each other. Yes, it is not always accurate, but it is simple and effective.

From extremes or from candle bodies? We remember the condition of subjectivity and accept:

You can draw Fibonacci levels from both shadows and candle bodies. But you can't combine them.

In other words, you don't have to tweak the grid to suit what you like. If you trade on a candlestick or bar chart, then it is better to draw Fibo at the extremes.

Construction of Fibonacci levels. We always go from left to right, as in writing. We select the correction lines in the terminal tools, point and set the cursor to the left extreme, then point and set the cursor to the right extreme.

To add or remove some levels, go to settings. Make sure that 100% corresponds to the beginning of the wave, and 0 to its end.

How to build Fibonacci extension lines? Here we need a reversal or retracement bottom to have already been formed. In other words, we should see the extreme extreme of the correction.

We select Fibo extensions and the first step is to designate a trend wave. The next step is to identify the correction wave. To avoid writing too much, look at the example. I hope everything is clear:

We make sure that 0 corresponds to the beginning, and 100% to the end of the wave - vice versa with the levels.

Fibonacci trading

Now we will look at one rather interesting strategy. Its peculiarity is that we are encouraged to catch “falling knives.”

During a correction, there is a greater chance that the price will follow the previous trend than turn into a new one.

We don’t need the 23.6% level for this system, so it can be completely removed in the settings. We leave only 38.2%, 50%, 61.8% and 78.6%. This condition applies to both correction and expansion lines.

The selection of securities takes place according to the principle of swing trading, which is described on this site, and all you have to do is find it :-). The main condition is that we need a trend, both long-term (on a higher timeframe) and current (on a traded timeframe).

So, we formulate the conditions for the purchase:

We wait. Events can develop as follows:

Position management. An example was selected above where the full position was typed. The purchase price in this case will be equal to the price at 50%, since this is the average of three.

When we have received the bottom of the rollback, we remove the Fibo correction levels and build extension lines. We set 2 limit orders to sell (profit taking) along lines 38,2 and 50. Each order closes a third of the position.

You can leave the last third so that the market itself will indicate where to close it.

Stop loss management. We move it to breakeven when the first third of the position is closed at 38.2. Then it can be moved higher as the price moves upward.

Opening short positions. We do all the same actions for a downward trend. There are no differences.

Advantages and disadvantages

Let's start with the cons:

1. If minimum size position in your broker is 100 shares or 1 lot, then you need to have a purchasing opportunity for at least 3 lots. Agree, not everyone can afford this;
2. Not every rollback reaches the 50% level, much less 61.8. This means that you will often not use your full trading potential, which reduces your possible profits (and losses too!);
3. Quite aggressive risk management– “hardcore” level. The risk in one position can reach up to 3-5% of the trading account;
4. The biggest problem - the securities you selected will already be at the stage of active rollback in AZT(trader's active zone). Very often, when you watch them, they will already pass the mark of 38.2, maybe 50, or maybe 61.8. You simply simply won’t have time to place limit orders to enter a deal.

Now let's go over the pros:

1. A mathematically understandable system for any level of trader– minimum information: no reversal patterns, candlestick patterns, indicators, etc.;
2. A completely automated strategy. We place orders to buy or sell, then immediately to close the position and, of course, stop loss. Then we go about our business – it’s nice;
3. Opening a position from the most extreme turning points. We do not wait for any confirmation of a reversal, but simply place limit orders;
4. The main advantage of such trading is pyramiding principle. This means that the position is opened and closed in parts. Moreover, the market itself decides which orders will work and which will not, and how much the trader will earn.

It turned out to be 4 points in each part. This strategy has no potential advantage. But don’t rush to draw conclusions, maybe I missed something - by accident or not. Try it and then draw your own conclusions.

Strategies with Fibonacci lines can be made more effective if you take into account the following 2 points:

1. You should trade strictly in the direction of the trend
2. Use methods technical analysis for more precise definition end of the correction.

No. 1 – Elliott waves and Fibonacci lines. It's difficult to speak specifically about Elliott waves, but one thing is certain: the market moves in waves and in a new trend, the wave, after the first rollback (correction), has the greatest potential.

We have talked more than once about how to determine a change in trend. But here's another way:

Every time a Fibonacci retracement is greater than 100% with a candle closing below the line, the trend is reset.

Look for these opportunities - the first pullback after a trend change is the best trading opportunity the market provides.

#2 – add trend indicators. Fibo levels and lines should be used on a trend. Flat is not suitable. Two moving averages as a filter, this is your lifesaver.

#3 – look for reversal patterns. Price action will always help determine the moment of the end of the correction and the beginning of a new wave. The simplest model is described here: " Swing Trader Entry Strategy».

Apply candle models. You don't need to use everything at once. Take a few patterns and work with them. Look for them near the main Fibonacci levels.

#4 – use oscillator signals. Another good way to “clarify” the end point of the rollback. Here: " Usage RSI indicator in swing trading", you can find useful notes on this matter.

#5 – use multi-timeframe analysis. On higher time frames, all trading tools are more accurate. If your trading is intraday, then determine levels, trend, etc. not only on the hourly or minute chart, but also on the daily one.

The upward trend on the smaller timeframe should continue on the larger one. The correction level on the daily chart should not hit resistance on the weekly chart.

Read more in the article “ Multiple Time Frames Strategy».

This is all. Long - I know, tired - I understand. But get your act together – it’s your duty to the comrades to leave your review, comment, giveaway or something that will help us increase our experience. Use Fibonacci lines mega profitably, we are waiting for you to say a few words below in the comments, be successful!

I am very sorry that I cannot write a book, but I can devote a few lines. You need to know about great people and don’t mind spending time studying the biography of Leonardo of Pisa (pseudonym of Fibonacci), the first major mathematician medieval Europe. I can assume that not everyone will be interested in the history of Fibonacci, therefore, you can go to the next section of our article and start studying the Fibonacci levels (lines) directly and their application.

And so let's get started. About what:

Fibonacci was born in Italian mall the city of Pisa, presumably in the 1170s (in some sources it is 1180). His father, Guillermo, was a merchant. In 1192 he was appointed to represent the Pisan trading colony in North Africa and frequently visited Bejai, Algeria. At the request of his father, who wanted Leonardo to become a good merchant, he moved to Algeria and studied mathematics (the art of calculation) there with Arab teachers. Later Fibonacci visited Egypt, Syria, Byzantium, Sicily

I won’t write, all this information can be found on Wikipedia. We should be wondering how the Fibonacci series came to be and why they work.

It turns out that Leonardo of Pisa (Fibonacci) loved to participate in mathematical tournaments, in which he solved problems proposed by himself, as well as by his rival, the court philosopher Frederick II Johann of Palermo.

One of the tasks was about breeding rabbits. A pair of rabbits was placed in a place fenced on all sides by a wall, the nature of which is such that any pair of rabbits gives birth to another pair every month, starting from the second month of their existence. How many pairs of rabbits will there be in a year?

To solve the problem, Leonardo used a sequence of numbers that was well known in ancient India, where it was used in metric sciences (prosody, in other words, versification), much earlier than it became known in Europe. A pattern of length n can be constructed by adding S to a pattern of length n-1, or L to a pattern of length n-2; and prosodists have shown that the number of patterns of length n is the sum of the two previous numbers in the sequence.

Thus it was put together:

1 + 1 = 2
1 + 2 = 3
2 + 3 = 5
3 + 5 = 8
5 + 8 = 13
8 + 13 = 21
13 + 21 = 34
21 + 34 = 55
34 + 55 = 89 etc...

The result was 377 pairs of rabbits.

Subsequently, Fibonacci began to study these numbers and found a pattern: when dividing the previous number from the sequence by the subsequent one in each case, the ratio is 0.618:

89/144=0,618;
55/89=0,618;
34/55=0,618.

Another interesting pattern - when dividing any term of the sequence by a term through one, the result is a number that is close to 0.382:

21/55=0,381;
34/89=0,382;
55/144=0,382.

And if you divide a member of the series by a number through two, you get a value close to 0.236:

34/144=0,236;
21/89=0.236, etc.

Having discovered this pattern, various scientists began to find the Fibonacci number sequence in almost everything. I don’t know for sure, I haven’t checked it myself, but they claim that phyllotaxis (leaf arrangement) in plants is described by the Fibonacci sequence. Sunflower seeds, pine cones, flower petals, and pineapple cells are also arranged according to the Fibonacci sequence. The lengths of the phalanges of human fingers are approximately the same as the Fibonacci numbers. Studies were also conducted on randomly selected girls, and it turned out that the navel is located at a level of 0.618 from her height.

So, since sequence is present in almost everything on earth, it would be foolish not to use Fibonacci price levels (lines) in trading. Almost any terminal has a tool called Fibonacci lines installed. The numbers on the scale are: 0.0, 23.6, 38.1, 50.0, 61.8, 76.4, 100.0. For convenience, the numbers are equated to percentages and calculate how many percent the price has rolled back (more on this below).

Construction of Fibonacci levels (lines)

And so, now we know that the numbers from the Fibonacci sequence are not taken out of thin air, but they have a logical explanation. Let's figure out how to plot the already familiar numbers 0.0, 23.6, 38.1, 50.0, 61.8, 76.4, 100.0 on a chart.

As usual, to begin with, let’s figure out what Fibonacci levels (lines) generally look like:

Now we know it's just a grid with lines arranged in percentages from 0 to 100.

Fibonacci price levels are used to determine a pullback after a trend that has just ended, or to determine the end of a trend movement (more on this below). Therefore, for us, only two peaks are important, where the trend began and the moment where it ended.

How to correctly build Fibonacci levels (lines)? By by and large, if we use Fibonacci levels (lines) and stretch the grid to determine rollback levels, then it should not matter to us which way to pull. Let's compare two charts on which fibo levels are stretched differently.

Option 1. The mesh is stretched from top to bottom.

Option 2. The mesh is stretched from bottom to top.

Please note that in both the first and second options, the price levels are in the same place, this is understandable, because the percentages are “mirror”, 23.6% + 76.4% = 100.0%, as well as 38.2% + 61.8% = 100.0%.

It turns out that we don’t care which way we pull the net, and it will be correct anyway. And yet, as it is written in the books, option 1 will be correct, because the grid must be pulled from left to right as the price moves, but as we said above, these are all trifles.

Trading using Fibonacci levels (lines)

Fibo levels are a great way to make money in the Forex market. It's time to squeeze profit from our knowledge. We already know how to correctly build Fibonacci levels (lines), we just need to understand how to use them.

An observant reader will most likely have already noticed a certain sequence in the above figures. Levels (lines) from Fibonacci number sequences serve as support zones, if we are trying to catch a trend pullback and resistance levels, if we are trying to catch the end of a trend. Yes, yes, and the tool is capable of this, but for these purposes we will need a few more numbers from the same sequence.

If the numbers given earlier helped us catch a pullback, then these numbers (161.8, 261.8, 423.6, 521.0) are called extensions and help determine the end of the trend.

But now, when we are trying to catch the end of a trend, it is necessary to build levels (lines) in the wrong way, namely from right to left, so that expansion levels were located along the trend creating some resistance.

Let's give a couple of examples where we are trying to catch a trend pullback.

Now let's see how you can catch the end of a trend.

As you can see, the fibo level was pulled onto the same chart where we tried to catch the pullback and after entering from the pullback at the level of 76.4% (or in our case 23.6%), the price reached the expansion of 161.8%, from where it began to reverse, but We fixed the profit, now we don’t care what the price does.

Congestion zones

Fibonacci levels (lines) do not have to be laid out in a single copy. On the contrary, if a lot of levels seem to be combined into one, such a level only intensifies.

What is meant. There are plenty of peaks on the chart. According to our rules, we must apply a grid from peak to peak, but how can we understand whether we took the right peak, maybe we made a mistake. To do this, it was invented to overlay a grid of several peaks and look for where fibo levels will begin to accumulate. Let's draw.

There are two Fibo grids on the chart. Green ovals show places where fibo levels accumulate, but there are differences in them. Note the lower cluster and the upper one. Obviously, the upper cluster of levels seems to be drawn with one line, and do not forget that we installed two tools. As we can see, it was from the upper cluster that the reversal began.

It is important to note that when using a cluster of fibo levels, you should not overdo it and stretch too many grids, otherwise you may not even see the chart. I can’t answer how many grids are good and how many are bad, you have to come to this yourself during practice. So, the introduction is given, the rest is up to you.

Frustrated expectation

I hope you paid attention to the pictures. Examples in which there is no certainty are specifically given. I’m not writing a website for colorful pictures, like books do, I want to tell the truth, at least the one I know. The fact is that with fibo levels you will have to rack your brain and independently find the patterns of why and when there is a rebound from one or another level. There are many trading strategies using fibo (for example, Fibo + MACD), as the patterns are determined, I will post the strategies in the public domain, but you yourself should not sit and wait, but work and develop yourself.

Conclusion

To summarize, we can say unequivocally: " Fibonacci levels (lines) are very helpful in a trader’s work". At the same time, you need to use the tool with your head, like everything else in life. As I wrote earlier in articles, it’s stupid to use levels and wait for a miracle, it won’t work. You need to learn to understand the market, and trade using Fibonacci lines (levels) must be some kind of filter so as not to knowingly open losing trades and always be on horseback.

I hope I have fully covered the described topic, in any case, comments below, if anything is not clear, ask, we will think it through, add it, and we will figure it out in one word.

Happy trading to all of us.

Now, using an example, we will look in detail at how traders use the Fibo grid in trading strategies, how support/resistance levels are determined, where orders for transactions should be placed.

Trading on corrections is one of the popular trading strategies. A correction is a periodic short-term pullback in prices. To determine price retracement points and take profits, traders use the Fibonacci grid, the levels of which, with a certain degree of probability, show the magnitude of correctional waves, the further direction and strength of the trend.

Building a Fibonacci grid

To construct the Fibonacci grid, they use not closing-opening prices, but local minimums and maximums. In the MT4 terminal, during a downtrend, the Fibo grid is stretched from top to bottom. Look at the graph:

We see a descending trend A-B. At point B, a correction began. We stretch the Fibonacci grid from the price maximum at point A to the minimum at point B. We find the Fibonacci grid level of 38.2%. According to theory, this is the first significant resistance level, indicated on the chart by a purple line, to which a correctional wave can extend, after which the trend will continue. At point C you should place a stop order to sell. We place the Stop-Loss just above the 38.2% level, limiting the loss if the price breaks through the resistance and rushes higher. As the chart shows, the price, having pushed off the resistance level, went down. The trend continued. Since the price did not break through the resistance at point C at 38.2%, the trend can be designated as strong.

In the following figure we see the development of events. Price reduction continues.


The next correction wave begins at point D, and the Fibonacci grid should be extended from point A to point D, or the next price low. It can be assumed that the price, like last time, having reached the level of 38.2%, will return down. However, prices broke through this level and rose higher. The next significant figure is 61.8%, around which the growth stopped and the downward movement resumed. The fact that the correction reached 61.8% indicates a weakening of the trend; we should probably expect the market to go flat or change the trend in the future, which is what actually happened. Please note that when prices rose in the place where the resistance line was drawn, sellers tried to return prices down, but buyers turned out to be stronger, the resistance was broken, and the price rushed up. Thus, another significant support level has been identified that can be used in further trading.

Fibonacci extension to determine price fixation level

Let's consider the case of an uptrend. At the level of 1.4270, the EURUSD pair began a corrective wave. Having dropped to the level of 1.4178, reaching the Fibo line of 38.2%, the price went up, the trend was strong and continued. Now, using the Fibonacci grid extension, we will determine where the price will go next.


Let's draw a resistance line at the maximum, where the correction began. Let's place another Fibo grid on the chart, stretching it in the opposite direction from top to bottom. Pay attention to the 161.8% level of the new Fibo grid. According to theory, the price should go to the area of ​​161.8%, where you need to place a Take-Profit order to lock in profit. On the chart we see how the price reached the calculated level, after which the trend weakened and a “flat” began.

I would like to draw your attention to the resistance line, highlighted in purple on the chart. After the correction, the price broke through the resistance level, rushing up. At some point, another correctional wave begins. The price, having dropped down, reaches the level of the previous high and returns back. The resistance line becomes a support line. A very significant level that will need to be taken into account in further trading.

Now let's look at how to place buy orders. At the beginning of the correction, assuming that the price will bounce off the level of 38.2%, we place a stop order to buy in the area of ​​1.4180 with a small loss of 35-40 pp. Then, calculating that the price will reach a level of 161.8%, we take profit by placing a Take-Profit order in the area of ​​1.4420. Total 240 pp. With an average point cost of 320 rubles, a profit of 76,800 rubles was made.

To determine trend movements and rebound points, traders, in addition to the Fibonacci grid, use the Fibonacci fan.

We have already looked at tools based on the Fibonacci number sequence, such as arcs, fans, extensions and time zones. It remains to talk about the last of the tools of this family (presented in the MT4 trading terminal) – Fibonacci lines.

Fibonacci lines are built on the basis of the main Fibonacci ratios (0.236, 0.382, 0.618...). The essence of constructing these lines on the price chart is that they reflect strong ones. Using these levels, in turn, you can determine the goals of the trend or the goals of its continuation.

Let's look at how Fibonacci lines are built in the MT4 trading terminal, and then talk about a specific way to use them in practice.

Fibonacci lines in MT4

Run trading terminal, then on the left side of the top menu, find the item "Insert". Next, go through the steps "Fibonacci" - "Lines".

Now you are asked to set two base points on the basis of which the lines will be built. These points are chosen as the minimum and maximum of the extreme wave of the current trend, or other important minimum and maximum on the price chart.

Well, now the Fibonacci lines have been built. If you wish, you can go through their settings; to do this, right-click anywhere in the chart window and select .

Select an object from the drop-down list Fibo and press the button "Properties".

A window will appear with four tabs:

An example of using Fibonacci lines in practice

Take a look at this chart with Fibonacci lines plotted on it:

Notice how precisely these lines marked the support and resistance levels on the existing part of the chart (these places are highlighted with blue rectangles).

Now look at how the price reacted to the Fibonacci lines after they were plotted on the chart (these places are highlighted in orange rectangles).

As you can see at the current moment in time, the price, having pushed off from the line 38.2, again approached a significant resistance level located on the line 61.8 (this level, as you can see, has repeatedly shown its strength in the past period of price history).

In this case, I would suggest that the price will most likely rebound from the level of 61.8 and go down to at least the level of 50.0 (and most likely even to the level of 38.2). But if suddenly this does not happen and the price nevertheless breaks through the 61.8 line, then this will be an impulse of sufficient strength (since it managed to break through such a powerful level) to make a significant leap upward.

How can you take advantage of the current situation? I proceed as follows:

1. I open a SELL position with levels at the price values ​​at lines 50.0 and 38.2 (on line 50.0 I will close half of the position, moving it to breakeven, and on line 38.2 I will close the second half of the position). I set the STOP LOSS level 50 points above the 61.8 line (as past price history shows, this level was not “pierced” to a greater distance during previous price reversals on it).
2. At the same level where I set STOP LOSS for the previous position (i.e. 50 points above the 61.8 line), I set a BUY STOP to buy. For this order I also set stop orders:
   • STOP LOSS order just below the 61.8 line
   • Order TAKE PROFIT at least 200 points up (after all, as I already said, if the price breaks through this level, it will break through it powerfully).

Thus, if I do not make a profit on the first position, then with a high degree of probability I will receive it on the second position (and in an amount that will cover the STOP LOSS loss from the first).

Conclusion

Fibonacci lines are certainly an interesting and very useful technical analysis tool available to a wide range of traders due to its availability in all popular trading platforms.

The popularity of this instrument alone can largely determine its strength. After all, the more traders pay attention to the same levels, the more pending orders they place on them and the stronger they become.

Another thing is that the construction of Fibonacci lines is somewhat subjective. My point is that different traders may have different views on the significant extremes at which to place base points for drawing lines. Therefore, when using this tool, you should adhere to the following recommendations:

1. When constructing Fibonacci lines, pay attention to the fact that they reflect significant levels of resistance and support in the past period of history (then there is a high probability that they will work out these levels in the future).
2. Use this tool in conjunction with other technical analysis tools, such as and. This will greatly increase the likelihood of your predictions (and as a result, will affect the number of profitable trades).