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?
THEORY OF PERCENTAGE RETRACEMENTS 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%.
CALCULATIONS 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
PIVOT HISTORY 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).
fibos: âElliott Wave Principle : Key to Market Behaviorâ by Frost and Prechter --- purchase or local library http://www.moneytec.com/forums/f33/fibonacci-links-6660/
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.
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?