As Raul pointed out earlier from the large sell off we could only retrace to .382 area. Now from yesterday's big move back down we only retraced to .382 ..is this just coincidence?? Or should we have been expecting it?
It appears random because there are many different retracement levels in play at the same time over all time frames, so you must learn to use them in YOUR time frame and also compare to other time frames to determine the probability of a move in the opposite direction....the duration of the move is another area of study. We watch price so hard we neglect the time it takes from one cycle to the next. Duration of a move as well as price will reverse a move. If you take the time and examine highs to lows over and over you will begin to see where these numbers are valid. Try this on a 15-30 minute chart and see if anything reveals itself.
No thank you. I only trade using a 1-minute time frame. I don't believe in magical ratios, least of all those to the 3rd or so decimal point. As for looking at other time frames for confirmation, you will always be able to find something or other if you look hard enough at enough different time frames, regardless of the direction you are trading in. If you don't believe me, select a random ratio or retracement level and see for yourself.
I only use fibonacci ratios in my trading. My method is to reverse any retracements that fall between .382 and .786. Works every time.
Fibonacci levels are useful. But they are not magical. There is a self fulfilling prophecy aspect associated with **ANY** TA tool that has real (or perceived) wide usage. When a tool in this league"fails" it offers insight into the market psychology at that time. At the end of the day (meaning at any given time) the market will do whatever it wants, and whatever that is, it is ALWAYS correct.
I bet your performance will be unchanged if you change it to reverse any retracements between .4 and .8, though.
How very interesting. So, if your market dips below .382 you will buy it for no other reason than the ratio? But what if it continues to retrace after entry? Will you just hold on or will you keep buying until .786 is surpassed? After all, anything between .382 and .786 is fair game for entry according to you.