High Probability Fibonacci Forex Strategy

The reason for the adoption of Fibonacci is to define the penetration of the probable retracement, correction or trend continuation and for taking most favorable profit.

The inclusion of support and resistance levels (red horizontal line on our chart), along with some basic indicators, ramps up our chances of winning, thus yielding a “High Probability Fibonacci Forex Strategy.”

Chart Setup

MetaTrader4 Indicators: Fisher.ex4 (Input Variable modified; period=60), HAMA_.ex4 (default setting)

Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour, 4-Hour, 1-Day

Recommended Trading Sessions: Any

Currency Pairs: Any pair

Download

Download the High Probability Fibonacci Forex Strategy

Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Enter a buy order if the following indicator or chart pattern gets displayed:

  1. Plot the Fibonacci Retracement levels by using the swing low and swing high on an uptrend as seen on Fig. 1.0. Zoom out of your chart and try to connect using the horizontal line tool, support and resistance price levels. Once this is established, you’ll have to observe how price will behave around this most likely high probability zone. If price bounces off this level to the upside, then it is a trigger to go long. Although, further confirmation is needed.
  2. If royal blue bars of the HAMA_.ex4 custom indicator aligns somewhat below price bars, price is said to be pushed higher i.e. a buy signal.
  3. If the lime histogram of the Fisher custom indicator forms above the 0.00 level as seen on Fig. 1.0, the sentiment in the market is said to be bullish i.e. a buy signal.

Stop Loss for Buy Entry: Place stop loss 2 pips below immediate support.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit if the following holds true:

  1. If the HAMA_.ex4 custom indicator bars turns red during a bullish alert, it is a trigger to exit or take profit without delay.
  2. If the histograms of the Fisher custom indicator turns red below the 0.00 level, it is an indication of downward price pressures, hence an exit or take profit will suffice.

Sell Entry Rules

Enter a sell order if the following rules or conditions are in place:

  1. Plot the Fibonacci Retracement levels by using the swing high and swing low on a downtrend as seen on Fig. 1.1. Zoom out of your chart and try to connect using the horizontal line tool, past support and resistance price levels. Once this is established, you’ll have to note the behavior of price around this most probable high probability zone. If price bounces off this level to the downside, then it is a trigger to go short. Although, further confirmation is needed.
  2. If red bars of the HAMA_.ex4 custom indicator aligns somewhat above price bars, price is said to be pushed lower i.e. a sell signal.
  3. If the red histogram of the Fisher custom indicator forms below the 0.00 level as seen on Fig. 1.1, the sentiment in the market is said to be bearish i.e. a sell signal.

Stop Loss for Sell Entry: Place stop loss 2 pips above immediate resistance.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following holds sway:

  1. If the HAMA_.ex4 custom indicator bars turns royal blue during a bearish alert, it is a trigger to exit or take profit without delay.
  2. If the histograms of the Fisher custom indicator turns lime above the 0.00 level, it is an indication of upward price pressures, hence an exit or take profit will suffice.

Sell Trade Example

Fig. 1.1

Free Download

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About The Trading Indicators

The Fischer custom indictor is a MetaTrader 4 indicator that tries to pinpoint trend direction, trend changes and trend strength in view of market action.

The indicator does not include any standard MT4/MT5 indicators in its code.

The HAMA_.ex4 indicator deploys a 2-color visualization (red and blue) scheme to deliver sell and buy signals respectively.

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