The problem is that Fibonacci levels form a multi-level system. It is the main reason of the trap. If you expect a reaction at 0.382 of the last High and it does not come, then you expect the 0.500 and then the 0.618. There is no fundamental [or statistical] reason to prefer 0.382 or the other levels. So, one may loose money, it is easy. On the other side, you will often read comments such as "the Gold futures reacted exactly at the 0.618 level, wow, amazing etc"
I use a combination of indicators. Indicators help me "see" the quality and quantity of the price action on a chart. I prefer this to any kind of Fib or Gann lines as I don't believe that the world in general is that predetermined.
Here´s the reason why it works. http://www.crystalinks.com/sg.html http://www.crystalinks.com/outofbox.html The universe is created by thought consciousness which manifests in physical reality through a geometric blueprint that we call Sacred Geometry. It repeats in cycles giving the illusion of linear time so we can experience emotions.
======================== May be a slight misunderstanding ''only using Fibonacci levels''; because stops, money management may be better part of it also. As to your original question '' TA Fibo....???''; say its better than nothing , 55 is a fibonacci number and like any support /resistance, some traders prefer 50 day moving average, not fibonacci #55 Not many would consider every fibo # an important level. Like the idea of measure on a trend, however in stock market; many do not swear by fibo, or use them.
If Leonardo Pisano (Fibonacci) were alive today, rather than using his number sequence to describe the reproductive mathematics of rabbits, he would have used his number series to describe the proliferation of baseless trading methods. P.S. I just can't get over the 3rd decimal point "accuracy" of the ratios.
When in a trend, if it retraces 0.382 and you see it turn again it is a strong trend and there may be a fair bit of the trend to go. If it turns at 0.5, then the trend is not so strong. If it turns at 0.618 then you could be in a trading range. You don't even have to use Fibonacci numbers. You can use 0.25, 0.5, 0.75 and there is nothing special about those numbers. The 0.618 is a bit special though. If the bull's target is represented by 1+x, where the 1 is one unit of the measured range and x is the added target and the bear's retracement is represented by 1/x, then bulls and bears fighting to gain ground will be when these 2 equations are equal and x will = 0.618, otherwise known as phi, otherwise known as the Golden Ratio. I hope that answers your question
Wiki is as correct as Britannica etc in science-math area. Wiki 'limitation' mostly occurs in controversial social science area like politics. I read the article, and thought the referring would contribute the understanding the Fib and Golden ratio. If you see the 'limitation' of the specific article, just point out the part, and modify here. Thanks.
Yes there are other numbers as well. I read on Dan Winters site that what 0,618 means is that when the market finds this order it becomes aware of itself.