I must admit that Fibonacci is among the last thing that I take care about in my forex lessons, and yes, I do regret for not taking this subject seriously during the earlier stage of my trading career. But anyway...
In case you do not know what fibonacci is all about, please... I highly recommend you to visit babypips.com since deliberate explaination has been provided in detail there. Otherwise, just type fibonacci in google and I can guarantee you there are numerous free lessons on what fibonacci retracements is all about.
Ok, the trick here that you must understand is, plenty of big time speculators are watching these levels all over the world and they're probably placing either BIG buy or sell orders at these levels, so called 23.6, 38.2, 50 and of course 61.8.
Hence, these are the levels where you should expect some minor or strong resistance, especially when it approach the 50 and 61.8 levels. Don't ask me why. So say you get into a trend especially on strong retracements or reversal, you could hang on till any of these levels are approached, especially for an intraday trader.
The point that I am emphasizing here is to watch out & be extra careful at these levels. Surely during a strong bull or bear run, any walls could be broken. It's just that it is worth to pay extra attention during normal trading days as most traders inclusive the institutonal traders would do exactly the same thing. So if you take these levels for granted, I guess you are a bit handicapped.
The best thing is to stick with the 1hr time frame and take actions accordingly to the hourly price actions. A bit of discretionary trading decision would help you in making a profitable decision.
Where to locate these Fibonacci Retracement? Easy... Just look at one of the top icon in your MT4 and click the button with dotted line and small "F" letter. Try to play around with it at the 4hr, Daily, Weekly or even Monthly chart. Take a top of bottom of any price chart and drag the other end to the most prevalent or obvious top or bottom as well.
You will be amazed seeing that certain major reversals and patterns can be clearly seen happened at these fibonacci levels. Surprised?
Now you will appreciate why prices turned around at certain level, very sharply at times. Surely there are other factors as well (like double zero, or triple zero which could be coincident) but that levels are the one the majority of market participants took some major decisions to either buy or sell.
Remember, the keys here is not what you & I believe. It is what the market believe that matters. So if most market participants think and believe that the price will reverse at that level, yes, for sure it will reverse there by their buying or selling actions.
Majority would surely win and it is our job to read and analyse what the majorities are doing. That is why somehow these levels are worth to be paid extra attention.
Ok Guys... take care.
Next I would like to talk about the importance of keeping a demo account along side your real trading account...
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