Because of Italian mathematics, which has lived for a long time, we have at our disposal a whole set of useful tools for market analysis. In this article, let’s talk about one of them. These are Fibonacci Channels which, when used skillfully, can make it easier for a trader to achieve the main goal. And it’s a profit from trading.
How to build Fibonacci channels on the chart
Fortunately, we don’t need to look for the right file on the Internet. The creators of the MT4 trading terminal made sure that this analysis tool is always at our fingertips. To find it, click “Insert” in the MT4 menu, then “Channels”. Select Fibonacci in the list of options that appears.
Fibonacci Channels are several parallel lines. But a trader needs to build only two of them on the chart, and the rest will be displayed automatically. The distance between the lines is calculated based on the size of the main channel and using the Fibo. proportions
Procedure for building a channel is as follows. Its first line is built on two maximums of price movement (for an uptrend), the second one – on the minimum movement.
For a downward trend we do the same. Only in this case, we draw the first channel line than two minima, and the second one through the maximum.
How to use Fibonacci channels in trading
Equal remote channel can be built by yourself or with other tools in MT4. The value of fibo channels is that they have four additional lines. Here they allow you to optimize your trading. These lines are considered as support and resistance for making decisions on closing previously opened orders and profit taking. These lines can also be used to open new trading positions during price correction.
In the channel settings, you can add lines or remove some of them if necessary in a trading strategy. And, of course, you can pick up their color and thickness.
And I also want to warn you that I wouldn’t recommend to build my trading exclusively through the fibo channels. But using them as an additional tool to assess the market situation can be very useful.
As with any other technical market analysis tool, Fibonacci channels should be tested on a demo account before you can include them in your trading system.Fyodorov’s Inga16.04.2018