Fibonacci Analysis is a very powerful trading tool in the Daily View. I have included charts of recent price action on the EURUSD which illustrate two recent Fibonacci Studies that are very relevant to any EURUSD Trade Plan.
The first chart below shows EURUSD Daily Price Action as it retraced back to the -61.8 Fibonacci Retracement Level and then advanced to the +61.8 Fibonacci Extension Level. I personally call these levels the -61.8 Retracement Level the +61.8 Extension Level because they are equal distance from the Zero Line, which is the high from which the study was measured. So, right away I know that if price retraced 50 pips to the -61.8 then my target is the +61.8 which is an equal distance of 50 pips beyond the Zero Line and I know I then have a 100 pip trade on my hands.
This is a slight adjustment that works for me. Generally, most traders have these levels labeled as the 61.8 Retracement and the 1.618 Extension. However, you label it is up to you, but the most important is understanding how price moves between these Fibonacci Price Levels.
Below is a recent example of a -61.8 to the +61.8 move in Daily Candles on the EURUSD.
You can see how clearly price respects there Fibonacci Levels in the Daily View.
Something else that is very interesting, if you draw the fib study to the new high after the +61.8 has been hit on the first Fibonacci Study, you get a new -61.8 Retracement Zone. And, most recently we got a double bottom right at this 1.08486 level. With this -61.8 pullback in play, the new extension levels above are possible targets once and if the current high at 1.13791 is broken. (As seen below)
So, explore using Fibonacci Analysis in the Daily View. I think you will be surprised how helpful it is.
Many thanks to Wayne McDonell for his guidance and education on Fibonacci Analysis in the larger time frames.
US DOLLAR ANALYST, FOREX.TODAY