Forex Fibonacci Strategy for Long-Term Traders

The forex Fibonacci retracement strategy for long-term currency traders is a powerful method to pinpoint entries in rising or falling markets. In this particular case, we use a weekly chart to draw fib levels and a daily chart to pinpoint entry levels in the overall direction of the trend. We use the same trading rules as the 38.2% fib retracement strategy for daytraders (please read first).

Download: Download the Fibonacci Retracements MT4 Indicator

Getting started

The first step in our analysis is to draw the Fibonacci retracement levels on the EUR/USD weekly chart from the peak to the low in order to determine the 38.2% fib retracement level. The 38.2% retrecement level of the recent uptrend is located at 0.9579. (see chart below)

fibonacci-forex-weekly-euro-retracement

Then, we look for buy signals in the vicinity of the 38.2% Fib level on a daily chart. (see picture below). We will be using a slightly modificated version of the SMA-Laquerre Forex Trend Strategy (written by Jeff Walker) to spot valid long entry signals.

fibonacci-forex-weekly-euro-entry

A valid buy signal appears at 0.9845. Stop loss is placed 3 pips below the 38.2% fib level at 0.9576.

Trading risk: Buy price- Stop loss price = 269 pips

Exit Strategy: I typically use risk to reward ratio: 1:3 or at least 600 pips profit target for long-term trades (whatever comes first exits the trade)

How did the euro/dollar buy trade work out?

fibonacci-forex-weekly-euro

The euro/us dollar rose more than 3000 pips from our entry level. The trade was exited at 1.0652 for a gain of 807 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