But , sometimes there doesn't seem to be any visible support or resistance level on the trading chart to give that chance. Based on this situation , we can use Fibonacci retracement levels tool to find reliable support and resistance level to enter a Forex trade. Just like many other trading system, the point is to first determine the trend direction. Then a Forex trader should wait the price move against the main market trend occur before trader entering the trade as it reversal movement.
The Fibonacci retracement levels tool gives three levels of resistance in a bearish trend and three levels of support in bullish trend. They are the 61.8%, 50% and 38,3% levels. On the example Forex chart below we can see these resistance levels after a downtrend move.
For example , if the Forex market traded down forex traders will then find for sells at 61,8% or 50% reversal levels and place stop loss beyond the 61,8%. Other traders may use a Forex technical indicator such as stochastic forex indicator to assist right time their entry position into the trend direction after the reversal. The bullish move to between the 61.8% and 38.2% levels signals the trade zone. We just find for sell opportunities since the bearish trend , we wait for a rally up to resistance level fibonacci to plot a reliable trade and then we could use a Forex technical indicator to assists us time our entry position as momentum reverses. This trading strategy looks simple , it's because it's meant to be simple trade.
