Fibonacci-Trading-Indikator_3
Oct 28, 2020
The Fibonacci-Trading-Indikator_3 indicator is a comprehensive technical analysis tool that projects Fibonacci expansion levels based on historical trading ranges to identify optimal market entry zones and minimum price targets.
Usage
The tool is designed to identify key areas for trade execution and profit-taking based on liquid market movements. To use the indicator, users must input the trading range and the extreme (highest high or lowest low) of a chosen timeframe.
- Market Entry: The primary entry zone is located between the 0% and 23.6% Fibonacci levels. Traders typically look for entries within this range as the market moves toward the previous long or short entry point.
- Profit Taking: The 61.8% Fibonacci level is considered the minimum achievable price target for a given period. It is recommended to realize at least 50% of the position's profit at this level.
- Trend Identification: Users can utilize additional tools like moving averages or "camelback" patterns to confirm the broader market direction before entering a trade within the Fibonacci zones.
Details
This indicator operates on the principle that market quotes move in Fibonacci ratios. It calculates expansion levels based on the trading range of a previous day, week, month, quarter, or year. By adding or subtracting these ratios from a starting price point (the current high/low of the period), the script generates a roadmap for the current bar's potential movement.
The tool includes a volatility stop mechanism. This stop uses a factor applied to the fluctuation range of price bars, smoothed by a moving average, to provide dynamic exit points. Additionally, the script features two switchable moving averages (SMA_H and SMA_L) that can be offset to help identify average entry points (DEP) in established trends.
Settings
Timeframe Selection
- Trend Direction: Toggle between upward and downward trend calculations.
- Timeframe Toggles: Select the period for calculation (Day, Week, Month, Quarter, or Year).
- Historical Data Inputs: Manually input the range and extreme highs/lows for the selected timeframe (e.g., "range previous day", "highest daily high").
Display Options
- Show Entry Levels: Toggles the visibility of the internal subdivisions within the 0% - 23.6% entry zone.
- Fibonacci Levels: Individual toggles for various expansion levels ranging from 38.2% to 276.4%.
- SMA Settings: Enable SMA_H and SMA_L, with adjustable periods, sources, and offsets.
Stop Management
- Stop CoEff: A multiplier for the volatility-based stop calculation.
- Stop LookBackLength: The period over which price fluctuations are averaged for the stop.
- Periods Stop Max: Smoothing period for the volatility stop.
FAQ
How do I use the entry area?
You should look to buy or sell when the price is within the 0% to 23.6% range of the calculated expansion, assuming the market trend aligns with your directional bias.
What is the 61.8% level used for?
The 61.8% level represents the minimum expected price target for the current timeframe. It is a common area to take partial profits.
How do I access Fibonacci-Trading-Indikator_3?
You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.
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