Discussion in 'Forex' started by frontier2002, Dec 1, 2006.

  1. Can anyone explain to me exactly how to use fibonacci number to determine the movement of forex.?

    And also i need to know how to use pivot point calculation because i keep calculation them wrong over and over again.. whats the good and bad of it?
  2. Exactly? please
  3. JM64


    It has been observed that after a period of market movement in one direction,
    prices retrace a portion of the previous trend before resuming the move in the
    original direction. These countertrend moves tend to fall into certain
    predictable parameters. Based on the number sequence presented by the 13th
    century mathematician Leonardo Fibonacci, a set of percentage retracements were
    developed to accurately mark important support or resistance areas. These
    retracements are 23.6%, 38.2%, 50%, 61.8%, 76.4%, and 100%.
  4. JM64


    The most common uses of the pivot technique look at points generated from the
    following formulas:

    Pivot Point (Daily Pivot)
    P = (H+L+C)/3

    Primary Resistance(Resistance Level 1)
    R1 = 2*P-L

    Primary Support (Support Level 1)
    S1 = 2*P-H

    where P = Pivot C = Close (previous day)
    H = High (previous day) R1 = Resistance Level 1
    L = Low (previous day) S1 = Support Level 1
  5. JM64


    The pivot point is essentially a mechanism for analyzing the short-term supply
    and demand factors affecting the market. It has limited applications for long-
    term decision making. Professional futures floor traders, also known as
    locals, are the biggest proponents of the pivot technique. Scalpers, brokers,
    market makers, and other short-term traders also use the technique, while
    upstairs or longer-term traders occasionally look at the pivot for ideas of
    what the floor traders are doing.

    The pivot point is basically the weighted average price of the previous trading
    day, calculated as the average of the previous trading day's high, low, and
    closing prices. It represents the major point of inflection each day.
    Unless there has been significant market news between the previous trading
    day's close and the current trading day's opening, locals often try to test the
    near term support, resistance, and pivot point.

    For example, many floor traders cover their shorts and go long into the pivot
    level if the market opens above the pivot point and starts to sell off.
    If the market rallies from the pivot point, locals begin liquidating into the
    primary resistance level (R1) and take short positions. Should the near term
    resistance level fail, however, it is likely the second resistance level (R2)
    will be tested as locals lean on the market by covering their shorts and going
    long trying to push the market to the next higher inflection point. If the
    second resistance level (R2) fails, because of market influencing news or
    observations, intermediate term positional players are likely to enter the
    market and make the market trend.

    The same method of leaning on inflection points also occurs if the market is
    below the pivot point. Locals lean on the primary support level (S1) and take
    long positions hoping to push the market back to the pivot point. If the
    primary support level (S1) fails, locals liquidate their long positions and go
    short looking for a move down to the secondary support level (S2).
  6. Ok... now i am not sure whats the use of resistance of supports. Lets say the movement has surpassed the resistance 1 what does it means to me!! Is there any significant to know it?

    Anyway what will you recommend for technical analysis books and video for me to buy in order to know more.
  7. nkhoi


    try John Person Candlestick & Pivot Point Trading Triggers book.
  8. Some people might look up into the night sky and see a big dipper, a hunter, twins, crab, bull, scorpion, scales, and a lion.

    Other people just see stars.

    What do you see?
  9. overpass:D
    #10     Dec 2, 2006