The daily Fibonacci forex trading strategy is an easy to use system that uses a single indicator known as the DailyFibonacci.ex4 indicator. This is basically an intraday system which allows the trader to take quick trades that are highly profitable.
- MetaTrader4 Indicators: DailyFibonacci.ex4 (default setting).
- Preferred Time Frame(s): 15-Minutes, 30-Minutes, 1-Hour.
- Recommended Trading Sessions: Any time. Depends on when the indicator signal appears on the chart.
- Currency Pairs: any
The indicator uses Fibonacci ratios to plot areas of support and resistance as well as pivot points. It also points out areas where the trader can go long or short, depending on whether these areas are support or resistance levels.
Buy Example (click the image for full size):
Long Entry Rules
A long position is initiated when the following is displayed on the chart:
- Price candle takes off from the Intraday Long line (seen on chart as first buy area).
- If the price has advanced and sometime later in the trading day, prices retrace back to a broken support, use that area for a second BUY. In this chart, this occurs at the Intraday R1 line.
Stop Loss for Long Entry:
≥5-30 pips below the support line on which trade entry is based.
Exit Strategy/Take Profit for Long Entry:
Knowing when to exit a trade is key and this can be achieved as follows:
- The next resistance line after trade entry is the 1st TP point.
- If the resistance line on the TP area is broken, you can apply a trailing stop to protect profits and follow the trade to the end.
Short Entry Rules
The indicator will display the short entry line as “Intraday short”, along with the entry price as shown on the chart.
- Once price is rejected at the intraday short line, take the Sell 2 signal by going short on the currency pair.
- Price must have been rejected at least 3 times at the intraday short line to make this area a valid resistance for a short trade. In other words, the Sell 1 signal should be ignored.
Stop Loss for Sell Entry
≥5-30 pips above the intraday short line.
Exit Strategy/Take Profit for Sell Entry
The exit strategy on a short position should be guided by the upcoming support lines on the chart.
- Naturally, the nearest support line should be used as the 1st TP target (TP1).
- Sometimes, the move may be very strong and will break that support (i.e. close below the support), as is the case with this chart. In this instance, you may use the next available support as the profit target (TP2 on the chart)
About The Trading Indicators
The DailyFibonacci.ex4 indicator not only traces the daily pivot points, but also points of price retracement and extension within the context of one trading day.
All positions are resolved same day. This indicator surely merits being listed as an indicator with potential for use on the MT4 platform.