Moving Fibonacci

The Moving Fibonacci strategy is a common strategy but I have adjusted the moving averages to fibonacci numbers. Also, RSI is optional but may help in confirming entry.

Prerequisites

Technical indicators to be used are:

EMA cross set to 34, 377

RSI (optional) can be set to display line at 50 level for trend confirmation

The down and dirty

First, ignore the but position on chart. It is unrelated to this particular strategy.

This can be done with only the 34 EMA but I, personally, like the long 377 moving average for further analysis on the price. Sometimes I use 55 and 512 but I prefer 34, 377.

The entry point for this strategy will be when a candle crosses over the 34 moving average. Look for a long, full candle for more success.

It is always nice to have 2 signals to confirm an entry so, you can look for RSI to be crossing the 50 level. For a bullish bias, signal line should be moving upward around 50 level and vice versa for bearish bias.

This strategy is quite popular, with variations of moving average periods and can be used in all markets and across every time frame but I prefer using 1-hour time frame.

As mentioned earlier, avoid short candles on entry and exit. Also, long tails on either end may signify the end of a trend or a strong temporary reversal.

On entry, be sure to set a stop loss and it’s a good idea to walk away and check back according to the time frame you’re trading. For instance, if you’re set up on the one-you chart, check back in an hour or two or, whenever the candle closes.

The point is not to get shook out of your position if the first pull-back closes across the line, as shown in the picture above. It is always best to set your stop loss and profit target before you even enter the trade and let the trade play out.

Be sure to jot down or type a journal entry once the trade exits, for profit or loss. This way you’ll know what works for you.

The following screenshot shows the importance of paying attention to the time frame and using multiple time frame analysis. Check out the last long green bar that breaks over the moving average line. If you was to have made an entry on the close of that candle, per the rules of this strategy, the next day would continuously put you in the negative.

That is the 4-hour time frame but look at the potential on the 15-minute chart:

Now, putting in an order once the candlestick closes over the moving average yields approximately 80 pips.

Look at the following example. It’s on the 4-hour chart and the red candlestick close has a decent size tail but I actually set a trade here.

Can you spot any good reasons to do so?

So, this is what I saw: the 34 period MA has extended quite a bit from the 377 period, there’s an ascending channel which, is known to breakdown at some point, looking back, I found an interesting resistance line, RSI dropped below 50, giving me a second confirmation signal, and the upside price action seems to be slowing down.

Having multiple signals or logical reasons for entering a position is most beneficial, but many traders suggest using only 2 or 3 confirmation signals because too much information can be just as detrimental than not having enough.

Here is another view of EUR/JPY on a daily chart. My position is after re-entry and is not important, as this is only a test account. Notice, the price is now 128.81. That’s about 70 pips from the last example shown at 129.58 and within only a few days.

Remember to always use stop loss and at least partial profit target. Starting out, I would aim for 5 pips. Once you’re comfortable and consistant with the trade, aim for 10 and repeat.

Recap + tips

Be careful if entering on short candles or candles with long tails.

Also, especially if a beginner, steer away from ranging or consolidating markets

Use multiple confirmation signals.

Another beginner tip is not to trade against a dual moving average trend.. In other words, if long (377) moving average is above short (34) m.a., this indicates a down trend and although you may notice big swings to the upside, there are other elements that make this harder to trade for a beginner.

DISCLAIMER

Futures and options trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed in this video or on this website. The past performance of any trading system or methodology is not necessarily indicative of future results. CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVERCOMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN. All trades, patterns, charts, systems, etc., discussed in this video or website and the product materials are for illustrative purposes only and not to be construed as specific advisory recommendations.