Forex Fibonacci Strategy for Swing Traders

Swing traders are able to deploy Fibonacci retracement to gauge support and resistance levels for price, and also determine possible zones for price reversal.

Swing traders deploy Fibonacci levels as a tool to trigger and exit positions in the market.

Chart Setup

MetaTrader4 Indicators: 20 EMA, 200 EMA, FIBO_S.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

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Download the Forex Fibonacci Strategy for Swing Traders

Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

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

  1. Once a large swing move is spotted during an uptrend, proceed on measuring it using the Fibonacci retracement tool. The fundamental idea is to pick pullbacks around the 38.2% and 61.8% Fibonacci retracement levels. Hence, price was seen to pullback around the 38.2% level and 61.8% retracement level, but the valid entry for a bullish trend is seen when price is trading above the blue 200 EMA line.
  2. If the green histograms of the FIBO_S.ex4 custom indicator aligns above the 0.00 signal level as seen on Fig. 1.0, price is said to be pressured higher, hence a trigger to go long on the currency of interest.

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 price breaks below the blue line of the 200 EMA indicator during a bullish signal, it is a sign of weaning buy pressures, hence a trigger to exit or take profit.
  2. If the red histogram of the FIB_S custom indicator forms below the 0.00 level during a buy signal, an exit or take profit is recommended.

Sell Entry Rules

Enter a sell order if the following rules or conditions take precedence:

  1. Once a large swing move is spotted during a downtrend, proceed on measuring it using the Fibonacci retracement tool. The central idea is to pick pullbacks around the 38.2% and 61.8% Fibonacci retracement levels. Price was seen to pullback around the 38.2% level and 50% retracement level, but we’ll ignore those around the 50% level, while taking note of the 38.2% level (considering price is trading below the blue 200 EMA line).
  2. If the red histograms of the FIBO_S custom indicator aligns below the 0.00 signal level as seen on Fig. 1.1, price is said to be pushed lower, hence a trigger to go short on the currency of interest.

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 gets displayed:

  1. If price breaks above the blue line of the 200 EMA indicator during a bearish trend, it is a sign of weaning bear pressures, hence a trigger to exit or take profit.
  2. If the green histogram of the FIB_S.ex4 custom indicator forms above the 0.00 level during a sell alert, an exit or take profit is recommended.

Sell Trade Example

Fig. 1.1

Free Download

Download the Forex Fibonacci Strategy for Swing Traders

About The Trading Indicators

The FIBO_S.ex4 is a custom indicator that is based on the Fibonacci sequence.

It comes within its separate indicator window, with colored (green and red) histograms that depicts market signals (buy and sell).

The 200 EMA and 20 EMA are both exponential moving averages that are set at 200 and 20 periods respectively.

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