Entry Trading in an Existing Trend

Trading with the trend can be helpful for Forex traders with longer time period. But, when we are looking at a market trend it can be difficult to determine where to open position into the Forex market. Let's take a look in the chart below, we can see the pair has been trending bearish , finding to short into existing bearish trend, could be benefit as the EURUSD moved down. So how can we determine a sell price in an existing market trend? in this post we will learn on opening position the trend using a retracement.

Fibonacci retracements are the right method to measure how long foreign exchange pair may reversal against the market trend. These Fibonacci levels are measured in percentage term by calculating the difference between the last high and low in a bearish trend. In the chart below we can see the reversal levels for the pair by calculating the distance between high and low. Usually Forex trader will wait for market price trader to a 38.2%, 61.8% or 78.6% price reversal before opening position.

The 78.6% percent reversal level is usually to as the “Fibonacci level of last resort”. When market price breaks through this level of resistance, Forex traders may assume market price will keep to test the previous high. For this case forex traders will watch to see if today's daily candle closes below the 78.6% Fibonacci retracement level. If market price hold , short positions may be considered with a stop loss order above today's high.

My suggestion is to open short position the pair close our 78.6% Fibonacci retracement level upon the daily candlestick close. And stop loss orders can be plot above resistance level plot by the current daily high. And profit target should set for at least 1:2 Risk/Reward ratio.

And here are Fibonacci custom indicator you can use in your trading reversal
- Fibonacci support resistance mq4
- Fibonacci pivotmq4
- Auto day Fibonacci mq4
- sell zone fibonacci mq4
- Fibo Retracement mq4