Hi,
we have a lots of talk today in
The Boiler Room about using Fibs when trading this strategy. In general we all think the same, just everybody use it differently
.
I know that Mr. Pimp is using Fibs for TP but here is my opinion on that - my way of using it for safer 1-2-3 entries and good TP levels.
EURUSD example:
1. First we must check if pair is playing by strategy rules - where are MA's, are they stacked nicely, is there any pivot point on our way, gold and crude moving in the same direction, and is our pair in sync with gold and crude.
2. Break occurs - i missed that one on chart because it was early in the morning but you can also skip initial break and play it safer with 1-2-3 entry later.
3. Wait for price to bounce on something and start retracing (
RED ellipse on chart) - and then draw your Fib from Top to Bottom because pair moved in that direction (and vice versa). You can confirm the retrace by watching CCI 7 crossing 00 line to +100 while CCI 63 remains under 00 line.
4. Price moves through various Fib levels plotted on your chart and bounces of 61.8 (
GREEN ellipse) - this is a perfect Fib retracement (price can bounce on 23.6, 38.2 but 61.8 is ideal - google Fibonacci forex trading and read a bit).
If doesn't bounce of 61.8 but continues move up - leave this trade. Ok, back to our example - you can see that with bounce of 61.8 our CCI 7 start to turn down to 00 and within few pips you have your perfect 1-2-3 entry.
5. Now we need to determine our TP target (
VIOLET ellipse) - as you all know we usually do it by looking next pivot, MA or trend line for price to bounce but it is very useful and also very accurate to look TP with our Fib tool - now that is called Fib expansion. Usually i look for 38.2 or even better 61.8 level but you always watch CCI's to confirm it.
In our example we have to the pip accurate Fib TP level for some 40-50 pips - perfect extension to Mr. Pimp's strategy.
Try this over the weekend and post here any thoughts on Pimp's strategy.
See you