46 ITM using daily pivot points and fibonacci retracements

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4/6 ITM using daily pivot points and fibonacci retracements

A pivot point is a price level which is used to forecast significant market support and resistance based on the prior day’s trading range. Most people use daily and weekly pivot points especially for intraday trading to pick out good reversal points in the market.

Here at The Forex Army, we take it one level further by introducing our own Fibonacci Pivot Points which is an adaptation from the standard pivot point and is historically more accurate in picking out reversal points than standard pivot points.

2. Is a pivot point enough to trade as a strategy?

Absolutely 100% not. The daily fibonacci pivot point combined with even the weekly pivot points is not enough to standalone as a trading strategy that will prove profitable in the long run. You need a couple more indicators to complement it for it to become a highly profitable trading strategy.

One of our live traders (2nd Lieutenant Jimmy) has developed a strategy that has proven tremendously profitable (hence we naming it after him). Here’s a preview of his profits in January on a live ATC account :

3. What other indicators are required to achieve these fantastic results?

The key point is to find indicators that point out key levels which reversals could potentially happen. As a combination of these indicators around pivot points can greatly increase your accuracy in picking an extremely high risk : reward trade (think 1 : 10+). In this section, we’ll cover what are the recommended indicators to be combined with the Fibonacci Pivot Point indicator.

3.1. The RSI

The Relative Strength Index (RSI) is one of the best oscillator indicator and perhaps the only one I ever use. With an adapted period of 13 (because of it’s fibonacci sequence), it helps pick out market tops and bottoms with great ease.

I’ve been trading long enough to know that every single market/currency responds differently to different key levels in RSI and in this tutorial on RSI Explained, I’ll explain more in-depth on the various ways you can use RSI to trade properly. For now, here’s one of the ways (and my preferred way) to use RSI in this trading setup, the key here is not to use the standard 20/80 rule as overbought and oversold and instead plot them out and find the specific levels and areas yourself :

3.2. The TFA Advanced Fibonacci Waves

The TFA Advanced Fibonacci Waves is what drives all the calculations behind the TFA Sniper, you can see how price responds almost magically to many of the waves. There are usually 2 areas of focus when observing the TFA Sniper on a single time frame :

  1. Areas of consolidation
  2. Wide Fibonacci Lines

Areas of consolidation

You can see in the above picture the areas of consolidation of the TFA Advanced Fibonacci Waves prove as great resistance even if just observing on a single time frame. While others have traded purely off these fibonacci waves by themselves, it is highly recommended to combine it with other indicators to give clearer confirmation of entry valid entry signals. In this case, we are looking for a combination of :

  1. Fibonacci pivot point
  2. RSI
  3. Area of consolidation

With these 3 combined, you have a good chance of seeing price reverse.

Wide Fibonacci Lines

Wide fibonacci lines usually stand by themselves, but they hold a lot of power in them. These are key reversal points and the wider they are, the stronger they are in forecasting reversals.

It’s important not to trade these by themselves too, instead, combine it with the above mentioned fibonacci pivot points and RSI to pick out good reversal trades.

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3.3. Candlestick Reversal Patterns

An additional point you can look out for to add further conviction to your trade are candlestick reversal patterns. There are a lot of information out there on candlestick reversals and I urge everyone to read up on them as much as possible. I personally love it when the candles have long “wicks” or “shadows”. couple of my favorites and which I personally think are the clearest are the following :

4. What about the take profit, stop loss and trade management?

There are numerous ways we can target take profit levels and manage our trades. Here are a couple of ways that are suggested :

4.1. Jimmy’s Method

Jimmy’s method is the most straightforward method, it involves setting a take profit at the first pivot point in the opposite direction. Meaning if you’re on the first resistance pivot point, you set your take profit on the first support pivot point. If you’re on the second resistance pivot point, you similarly set your take profit on the first support pivot point. Here’s an example :

4.2. Use Fibonacci Retracement Levels

One other effective way to take profit is to use fibonacci retracement levels, especially those that coincide with graphical overlap levels (refer to the breakout pullback strategy to understand what a graphical overlap level means)

What are the recommended fibonacci retracement levels to use? We recommend the golden ratio (0.618) to be used when taking such profits.

Below is an example of a good AUDUSD trade opportunity with the JT strategy. Notice how the 61.8% retracement coincides with the breakout level too. In this case, it would be fine to use either the 61.8% and the 50% level. We can even take half our position at 50% and the other half at 61.8%.

5. Conclusion to using pivot points for intraday trading

In conclusion, using pivot points is a very profitable way to trade but it’s not recommended to use them exclusively by themselves to trade. They should be combined with the really powerful advanced fibonacci waves we have here, along with a knowledge on using RSI correctly to pick reversal points. On top of that, it’s important you equip yourself with the knowledge of learning how to use fibonacci retracements to pick certain levels to take your profits at.

There are many websites out there that teach you how to use pivot points like those at investopedia and stockcharts but sadly, they are usually insufficient as they do not help you see the market holistically.

Now that you’re done with this tutorial on how to use pivot points in intraday trading, I highly recommend you check out our other scalping strategies like our famous breakout pullback strategy that brought in 134% in 1 month on a live account.

© 2020 – 2020 TFA Global Pte. Ltd. All rights reserved. All other trademarks appearing on this Website are the property of their respective owners.

Disclaimer and Risk Warning: Leveraged trading in foreign currency contracts or other off-exchange products on margin carries a high level of risk and may not be suitable for everyone. We advise you to carefully consider whether trading is appropriate for you in light of your personal circumstances. You may lose more than you invest. Information on this website is general in nature. We recommend that you seek independent financial advice and ensure you fully understand the risks involved before trading. Trading through an online platform carries additional risks.

The information on this site is not directed at residents of countries where its distribution, or use by any person, would be contrary to local law or regulation.

Easy Fibonacci pivot point daily for double gain TP=2

Easy Fibonacci pivot point daily for double gain TP=2

If you finally decide to trade . it will be when you are focused every day on your decisions, to enter the market.
To overcome the fear of having mistakes in a trade you must have the following concepts:
1. Study economic news every day. (web of consultation and classification)
2. Have reference fibonacci pivot points or guide pivot.
3. Have a money manager plan applied to each trade.
4. Confirm your confidence in tracking indicators.
5. Have a call to action alert.

This system is a method of supporting their decisions, eliminating part of the fear and using confirmation indicators.
FOCUS . Focus . focus

The system is organized to work in the following way:
Choose a parity with low spread, and that you do the daily tracking. EURUSD
The chart 15m.

1. Check the economic news of the week: https://www.forexfactory.com/calendar.php
2. With these indicators, the Fibonacci pivot point , you will be able to know your daily reference points.
3. The money manager of each trade is very important:

Strategy m�dium trade: Also you take the DOUBLE of the stop
(example: stop=15 TP=30).

4. Use the directional breakout indicator and confirmation of the input signal.
5. The input signal is an alert to the action of trade, taking as reference the pivot . Indicator

Finally the Price action is the reality of the possibilities of your trade, You will be able to analyze the pivots to move your stop to the entry point Break Even. Also with the action price tracking, you can decide whether to stay in the trade or exit prematurely.

Remember, it is impossible to know the future of your trade in the market. You should look for the best possibilities in favor of your trade.

Start the knowledge of the FOCUS Focus focus system in a demo account, and only under your risk and decision, a real account will allow you to overcome the fear of errors.

When you overcome the fear of mistakes and the possibilities are in your favor– You have started the path to being a Trader . Remember the system is just a means to analyze the market and have the possibilities in your favor in the trade.
Trading time:
Start at the opening of London
Volatility increases and 8 to 10 hours are available to have one or two signals.
Pairs:
I prefer the EURUSD low spread, you can also use other pairs for a double the stop.
Stop=1 TP=2

Example: stop =20 TP=40

Buy Entries
Looks for the pivot lines enter nearest the pivot lines, Directional Breakout green alert arrow up.
Stop below the pivot line or placed the nearest .
Take your TP a double the stop.
Stop=1 TP=2

Sell Entries
Looks for the pivot lines enter nearest the pivot lines, Directional Breakout red, alert arrow down.
Stop above the pivot line or placed the nearest .
Take your TP a double the stop.
Stop=1 TP=2

more. action
If you prefer to seek more action and have the strength in your favor, you can also be aware of other parities with the cmstrength indicator.
see post #5 indicator and template

edit 2020 ag 23: with this indicator you change parities quickly
post #6

the buy and sell alerts are complemented with the fibonacci pivot to define the stop and the TP . remember the supports and resistances are important and are complemented with the pivot . this is an indicator of supports and resistances

S/R LEVELS indicator post #7

edit:
Wulkar EA semiautomatic for the system
place the hidden stop
place the hidden TP
does the Break Even
You can choose the stop and the TP equally the Be

Template for the EA semiautomatic
post #10

EDIT 2020 AGO 31
To have the preferred parities open and wait for the alert this template is the simplest POST #25

Top 4 Fibonacci Retracement Mistakes to Avoid

Every foreign exchange trader will use Fibonacci retracements at some point in their trading career. Some will use it just some of the time, while others will apply it regularly. But no matter how often you use this tool, what’s most important is you use it correctly every time.

Improperly applying technical analysis methods will lead to disastrous results, such as bad entry points and mounting losses on currency positions. Here we’ll examine how not to apply Fibonacci retracements to the foreign exchange markets. Get to know these common mistakes and chances are you’ll be able to avoid making them—and suffering the consequences—in your trading.

Top 4 Fibonacci Retracement Mistakes To Avoid

Key Takeaways

  • A Fibonacci retracement is a reference in technical analysis to areas that offer support or resistance.
  • Foreign exchange traders, in particular, are likely to use Fibonacci retracements at some point in their trading career.
  • One common mistake traders make is confusing reference points when fitting Fibonacci retracements to price action.
  • New traders tend to take a myopic approach and mostly focus on short-term trends rather than long-term indications.
  • Fibonacci can provide reliable trade setups, but not without confirmation, so don’t rely on Fibonacci alone.

1. Don’t Mix Reference Points

When fitting Fibonacci retracements to price action, it’s always good to keep your reference points consistent. So, if you are referencing the lowest price of a trend through the close of a session or the body of the candle, the best high price should be available within the body of a candle at the top of a trend: candle body to candle body; wick to wick.

Incorrect analysis and mistakes are created once the reference points are mixed—going from a candle wick to the body of a candle. Let’s take a look at an example in the euro/Canadian dollar currency pair. Figure 1 shows consistency. Fibonacci retracements are applied on a wick-to-wick basis, from a high of 1.3777 to a low of 1.3344. This creates a clear-cut resistance level at 1.3511, which is tested, then broken.

Figure 1: A Fibonacci retracement applied to price action in the euro/Canadian dollar currency pair.

Source: FX Intellicharts

Figure 2, on the other hand, shows inconsistency. Fibonacci retracements are applied from the high close of 1.3742 (35 pips below the wick high). This causes the resistance level to cut through several candles (between February 3 and February 7), which is not a great reference level.

Figure 2: A Fibonacci retracement applied incorrectly.

Source: FX Intellicharts

By keeping it consistent, support and resistance levels will become more apparent to the naked eye, speeding up analysis and leading to quicker trades.

New traders often try to measure significant moves and pullbacks in the short term without keeping the bigger picture in mind. This narrow perspective makes short-term trades more than a bit misguided. By keeping tabs on the long-term trend, the trader can apply Fibonacci retracements in the correct direction of the momentum and set themselves up for great opportunities.

In Figure 3, below, we establish the long-term trend in the British pound/New Zealand dollar currency pair is upward. We apply Fibonacci and see our first level of support is at 2.1015, or the 38.2% Fibonacci level from 2.0648 to 2.1235. This is a perfect spot to go long in the currency pair.

Figure 3: A Fibonacci retracement applied to the British pound/New Zealand dollar currency pair establishes a long-term.

Source: FX Intellicharts

But, if we take a look at the short term, the picture looks much different.

Figure 4: A Fibonacci retracement applied on a short-term timeframe can give the trader a false impression.

Source: FX Intellicharts

After a run-up in the currency pair, we can see a potential short opportunity in the five-minute timeframe (Figure 4). This is the trap. By not keeping to the longer-term view, the short seller applies Fibonacci from the 2.1215 spike high to the 2.1024 spike low (February 11), leading to a short position at 2.1097, or the 38% Fibonacci level.

This short trade does net the trader a handsome 50-pip profit, but it comes at the expense of the following 400-pip advance. The better plan would have been to enter a long position in the GBP/NZD pair at the short-term support of 2.1050.

Keeping in mind the bigger picture will not only help you pick your trade opportunities, but will also prevent the trade from fighting the trend.

3. Don’t Rely on Fibonacci Alone

Fibonacci can provide reliable trade setups, but not without confirmation.

Applying additional technical tools like MACD or stochastic oscillators will support the trade opportunity and increase the likelihood of a good trade. Without these methods to act as confirmation, a trader has little more than hope for a positive outcome.

In Figure 5, we see a retracement off a medium-term move higher in the euro/Japanese yen currency pair. Beginning on January 10, 2020, the EUR/JPY exchange rate rose to a high of 113.94 over almost two weeks. Applying our Fibonacci retracement sequence, we arrive at a 38.2% retracement level of 111.42 (from the 113.94 top). Following the retracement lower, we notice the stochastic oscillator is also confirming the momentum lower.

Figure 5: The stochastic oscillator confirms a trend in the EUR/JPY pair.

Source: FX Intellicharts

Now the opportunity comes alive as the price action tests our Fibonacci retracement level at 111.40 on January 30. Seeing this as an opportunity to go long, we confirm the price point with stochastic, which shows an oversold signal. A trader taking this position would have profited by almost 1.4%, or 160 pips, as the price bounced off the 111.40 and traded as high as 113 over the next couple of days.

4. Using Fibonacci for Short-Term

Day trading in the foreign exchange market is exciting, but there is a lot of volatility.

For this reason, applying Fibonacci retracements over a short timeframe is ineffective. The shorter the timeframe, the less reliable the retracement levels. Volatility can, and will, skew support and resistance levels, making it very difficult for the trader to really pick and choose what levels can be traded. Not to mention in the short term, spikes and whipsaws are very common. These dynamics can make it especially difficult to place stops or take profit points as retracements can create narrow and tight confluences. Just check out the Canadian dollar/Japanese yen example below.

Figure 6: Fibonacci is applied to an intraday move in the CAD/JPY pair over a three-minute time frame.

Source: FX Intellicharts

In Figure 6, we attempt to apply Fibonacci to an intraday move in the CAD/JPY exchange rate chart (over a three-minute timeframe). Here, volatility is high. This causes longer wicks in the price action, creating the potential for misanalysis of certain support levels. It also doesn’t help that our Fibonacci levels are separated by a mere six pips on average, increasing the likelihood of being stopped out.

Remember, as with any other statistical study, the more data used, the stronger the analysis. Sticking to longer timeframes when applying Fibonacci sequences can improve the reliability of each price level.

The Bottom Line

As with any specialty, it takes time and practice to become better at using Fibonacci retracements in forex trading. Don’t allow yourself to become frustrated—the long-term rewards definitely outweigh the costs. Follow the simple rules of applying Fibonacci retracements and learn from these common mistakes to help you analyze profitable opportunities in the currency markets.

Pivot Point Strategies for Forex Traders

A forex pivot point strategy could very well be a trader’s best friend as far as identifying levels to develop a bias, place stops and identify potential profit targets for a trade.

Pivot points have been a go-to for traders for decades. The basis of pivot points is such that price will often move relative to a previous limit, and unless an outside force causes the price to do so, price should stop near a prior extreme. Pivot point trading strategies vary which makes it a versatile tool for forex traders.

Keep reading to learn more about:

  • Defining the pivot point
  • How to calculate pivot points
  • Using pivot points in forex trading
  • Pivot point trading strategies
  • Difference between pivot points and Fibonacci retracements

What is a pivot point?

A pivot point is a is a technical indicator used by forex traders as a price level gauge for potential future market movements. The pivot point indicator is used to determine trend bias as well as levels of support and resistance , which in turn can be used as profit targets, stop losses, entries and exits .

Pivot point example:

How to calculate pivot points

The calculation for the most basic flavor of pivot points, known as ‘floor-trader pivots,’ along with their support and resistance levels:

Pivot point formula

Pivot point (PP) = (High + Low + Close) / 3

First resistance (R1) = (2 x PP) – Low

First support (S1) = (2 x PP) – High

Second resistance (R2) = PP + (High – Low)

Second support (S2) = PP – (High – Low)

Third resistance (R3) = High + 2 (PP – Low)

Third support (S3) = Low – 2 (High – PP)

There are other ways to calculate the pivot point, which is available on most trading platforms and can be extended through different time frames . The support and resistance levels will be calculated as above. Below is an example of what is offered on the IG trading platform for daily pivots. The same calculation can be made for weekly or monthly pivots too:

How did the pivot point calculation come about?

Up until recently, computers were not available on a mass scale. Therefore, market makers and floor traders needed a way of determining whether price was ‘cheap’ or ‘expensive’ on a relative basis. From a simple mathematical calculation, pivot points were born.

Traders simply took the high, low, and closing price from the previous period and divided by three to find the ‘pivot.’ From this pivot, traders would then base their calculations for three support, and three resistance levels.

How to use pivot points in forex trading

Pivot points are used by forex traders in line with traditional support and resistance trading techniques. Price tends to respect these levels as they do with support and resistance. Pivot point price levels are recurrently tested which further substantiates these levels.

Traders frequently use additional validation tools such as indicators, candlestick patterns , oscillators, fundamentals and price action to use in conjunction with the pivot to make trade decisions in the forex market.

There are a few basic guidelines to follow when trading with pivot points:

  1. Price above pivot = bullish bias
  2. Price below pivot = bearish bias
  3. Longer period pivot points are more dependable due to increased data set
  4. Support and resistance levels are extensions of the pivot which can be used as supplementary key price levels

Pivot Point trading strategies

1. Pivot point s wing trading

For traders who prefer the medium to longer-term trades, swing trading with the pivot point is possible by using weekly/monthly time frames.

The chart below depicts a weekly chart with the addition of the pivot point only (this can be edited by changing the pivot settings on the platform). It is clear there has been a trend reversal to the upside which is evident after the price breaks through the previous pivot resistance.

Now acting as a support level, forex traders can place long entry orders at the pivot price. There is a false breakout (blue circle) but after this, there is substantial upside which could be exploited. The pivot levels won’t always contain the price, but it does offer a price level to maintain the directional bias. This would be a lengthier time horizon which would be ideal for swing traders.

2. Pivot point breakout strategy

Many traders attempt to focus their trading activity to the more volatile periods in the market when the potential for large moves may be elevated.

Traders may attempt to look at breaks of each support or resistance level as an opportunity to enter a trade in a fast-moving market. This can be particularly relevant for longer-term pivot levels, with focus being paid to the weekly and monthly pivot points. The charts below will show how a trader can set up a pivot point breakout strategy using firstly the pivot alone as an indication as well as the more complex support and resistance levels.

The chart below shows a pivot point with support and resistance levels excluded. In this example, the pivot indicator is based over a weekly period which provides traders with an extended data set for a more reliable key level. The pivot is used as a key price level, which was initially respected a few candles prior to the breakout. Once the breakout occurs, traders can then look to enter into a long trade as price above the pivot signals a bullish bias.

What’s the difference between pivot points and Fibonacci retracements/extensions?

Both pivot points and Fibonacci retracements /extensions present traders with hidden levels of support and resistance . However, there are some significant differences:

Pivot points Fibonacci retracements/extensions
Calculated as the average of the previous periods high, low and close Based on fixed ratios as a result of the Fibonacci sequence
Based on previous period price extremes Based on previous waves price extreme

Further reading on pivot points

  • Learn the basics of the classic pivot, with our guide to f loor trader pivots .
  • Get to grips with trading with support and resistance to build the groundwork for basic support and resistance practices.
  • Use our hourly, daily, weekly and monthly pivot points to determine market sentiment in forex and other key assets.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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