Forex Fibonacci Strategy for Daytraders

The Fibonacci 38.2% retracement forex strategy for daytraders is extremely powerful to look for low risk-to-reward entries in both rising and falling markets.

I will be using the pictures below to explain how the strategy works. In this case, we use a hourly chart to draw fib levels and a 5-min chart to pinpoint entry levels in the overall direction of the trend.

Download: Download the Fibonacci Retracements MT4 Indicator

First take a look at the euro/dollar 1 hour chart below. It shows an uptrend from 1.1875 lows up to 1.2147 peak. Let’s draw the Fibonacci retracement levels on the 1 hour chart from the peak to the low in order to locate the 38.2% retracement level.


The 38.2% retrecement level of the recent uptrend is at 1.2045. A couple of hours later, the euro/dollar rate reaches the 38.2% fib level and now i’ll be looking to find low risk-to-reward opportunities to go long.

How? I pull up a 5 min chart to spot entry signals in the vicinity of the 38.2% Fib level. I will be using a slightly modificated version of the SMA-Laquerre Forex Trend Strategy (written by Jeff Walker) to spot valid long entry signals.


Trading rules for long* entries:

  • Laquerre indicator is oversold (0- 0.15 value) and moves back above 0.15.
  • EMA cross-over shows a green up arrow.
  • Enter long trade at the candlesick’s close.
  • Place initial stop loss a few pips below the 38.2% Fibonacci retracement level.
  • Exit Strategy: I typically use risk to reward ratio: 1:3 or at least 75 pips profit target for day trades (whatever comes first exits the trade).

*You can apply the same rules for short trades but do the opposite.

The picture above displays a valid long entry signal at 1.2076 currency exchange rate with stop loss placed 3 pip below the 38.2 fib level at 1.2042.
Risk on the trade: 34 pips.

How did the trade work out?


The euro/us dollar moved nearly 300 pips upwards from our entry level. The trade was exited at 1.2178 for + 102 pips.

Download Forex Analyzer PRO For Free Today!

Brand New Forex System With Super Accurate And Fast Signals Generating Technology.

Forex Analyzer PRO generates buy and sell signals right on your chart with laser accuracy and NEVER REPAINTS!

  • Up To 200 Pips Every Day
  • Buy And Sell Forex Signals
  • Advanced Daily Range Detection
  • Email & Mobile Trading Alerts
  • No Repainting Or Lagging