I wanted to use the latest ABCD move the EU made in the last couple of weeks to explain how I use Fibonacci retracement/extensions to set my profit targets and to demonstrate just how useful Fibonacci levels can be. Take a look at the daily chart. As you can see, after price reached the 1.4050 area on 5/24 (A-B) it retraced to 1.3812 (B-C) which is the 38.2 retracement level. A 38.2 retracement means that if price breaks the 0.0 fib level after the retracement and retests this level your target (C-D) is the 138.2 extension level which is 1.4295. Price did exceed the 138.2 fib level by about 40 pips but that is a pretty big move.
I am standing aside for now. I don’t like to have any positions open before rate announcements unless I have locked in some profit because of the volatility before, during and after the announcement. I will continue to look short as long as the 21 exponential moving average (EMA) holds as resistance on the H4. I am now posting my trades in real time on twitter.
I am standing aside for now. I don’t like to have any positions open before rate announcements unless I have locked in some profit because of the volatility before, during and after the announcement. I will continue to look short as long as the 21 exponential moving average (EMA) holds as resistance on the H4. I am now posting my trades in real time on twitter.
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