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# How To Make Money In The Market Using This Fibonacci Indicator

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#### Fibo For Yesterday And Next Week Forex Indicator

The Fibonacci tool is a technical indicator that detects various patterns in price dynamics, which are invisible to detect with the naked eye. It also helps us in identifying the future price action. This indicator works best in the trending market. As we know, in the trending market, prices always retrace back to move further in a trend. So in an uptrend, when the prices retrace back to the Fibonacci support area, the idea is to go long. In a downtrend, we wait for the prices to retrace back to the Fibonacci resistance area to go short.

#### Fibonacci Numbers

Fibonacci numbers or ratios are mathematically calculated numbers that occur in nature and often in financial markets. Fibonacci numbers were discovered by Leonardo de Pisa in the 13th century. The most important ratio is 61.8%. In the Forex market, Fibonacci retracements identify potential support and resistance levels. In the financial markets, the most commonly used Fibonacci levels are 23.6%, 38.2%, 50%, 61.8%, 76.4%. In a strong buying market, traders expect the retracement back to the 38.2%, whereas, in a weaker trend, traders expect the retracements back to 61.8%.

#### How to draw the Fibonacci Retracement Trend line?

Finding Fibonacci retracement levels on the chart is pretty easy. At first, find the swing high and swing low in an ongoing trend. Keep in mind that the base of the trend line should be drawn from left to right. In the below chart, you can see that the market is in an uptrend and the price is retracing to the downside. If the trend is strong enough, you can look for the 38.2% Fibonacci level. But if the trend is weak, look for the retracement at 61.8% Fibonacci level.

In the EURUSD 4 hour chart below, the market is in a downtrend, and we applied the Fibs Indicator to it.

As you can see, the swing high was at 1.4195 and the swing Low at 1.3854. The retracement levels are 1.3933 which is at 23.6% Fibonacci Level, 1.3983 (38.2%), 1.4033 (50.0%), 1.4064 (61.8%) and 1.4114 (76.4%). We are expecting the prices to retraces from this low to any of the Fibonacci levels to resume the downtrend again.

In the EURUSD 4 hour chart below, the market is in a slight uptrend, and we applied the Fibs Indicator to it.

You can see, market tests the 23.6 level and 0.382 levels, but found its resistance at the 0.50 level. If you had placed your order at 0.38 or 0.50 level, you would’ve made some money. Most of the traders in the market always wait for the prices to retraces back to any of these areas, to place their trade. So depending on the strength of the trend, the price will reach any of these Fibonacci levels.

#### Installing ‘Fibo For Yesterday And Next Week’ in MT4 (step – by – step process)

‘Fibo For Yesterday and Last Week’ Forex indicator provides significant support/resistance levels to detect the price reversals in the market. By default, this indicator is not available in the MT4 terminal, but you can download it from the internet. Here’s how.

Copy the ‘Fibo For Yesterday and Last Week’ indicator to your MT4 directory/MQL4

Click on the ‘indicators’ folder and paste.

Search for “Custom Indicators” in the MT4 Navigator. It is available on the left side of the MT4 terminal.

Right-click on ‘Fibo For Yesterday and Last Week Forex Indicator’ and click ‘Ok.’

The indicator will then show up on your chart.

In the image below, we have plotted this indicator on the EURUSD chart.

#### Trading strategies using the ‘Fibs’

Fibonacci Retracements with the Trend Lines

By now, we know that this indicator gives the best signals when the market is trending. So most of the traders use these Fibs levels to get in on the ongoing trend. But if you add the trend line to Fibs, it will make a lot more sense while taking your trading decisions.

In the below chart, the market is in an uptrend. Every time the price hits the trend line, It is shooting up.

We have then plotted the fibs on the chart by using the swing low and swing high. Now we are waiting for the price to retrace back to the trend line where the 61.8% Fibonacci level intersects with the trend line.

In the below chart, it clearly shows that the market is held at the 61.8% level. If you had some orders placed at 61.8% area, it would be a perfect entry. After a couple of hours, the market prints a brand new higher high, which could be your potential target.

Hence in a trending market, Fibs combined with Trend Line is a great tool to generate potential trading signals.

#### Combining Fibonacci Retracements with Japanese Candlesticks

Candlestick patterns, as we know, are pretty reliable and easy to read and understand the price action. In this strategy, we are going to combine the candlestick pattern with the Fibs to generate trading signals. The crux is that we are going to use only exhaustive candlesticks. This can help us in identifying when the buy and sell pressure is exhausted in the market and gives us a clue about future price direction.

In the below chart, the market was in a downtrend, and the price just started to pull back. We have then applied the fibs by using the swing high and swing low. Then we wait for the candle to get exhausted near any of the fibs levels.

We can clearly see that the pullback was quite strong in the chart below. The price reacted from the 0.50 level but failed to continue the ongoing trend. When the prices reached the 61.8% level, a Doji is formed on the fib level. Doji is nothing but a candle that got exhausted. This is a clear indication of the selling trend to continue.
The image below clearly shows that right after the Doji, prices started moving to the downside. If you have placed your sell order at the 0.618 level, you could have made some serious money from that trade. Prices went all the way back to the recent low. That was a move of 500 pips in the market.

In this way, you can accurately use the knowledge of the candlesticks in the market.

#### The Bottom Line

Fibo for yesterday and last week‘ is a powerful and popular indicator. It works best in the trending market. Fibs cab be used by the traders to identify the significant support/resistance levels. Remember always to apply the fibs from left to right and use swing high and swing low to apply the indicator on the chart. You can use this tool all alone to generate trading signals but to be more assured about your trading decisions, combine them with other indicators or tools as we mentioned in the above strategies. Happy Trading!

I am Reddy Shyam Shankar Garla. I am a Professional FOREX trader, Cryptocurrency Analyst, Blockchain Vehement, Professional Poker Player and Real Estate Investor. I am managing Asset Management Platform named Hashloops LLP.