When your significant other asks you a direct question, you better tell the truth! So when is a "fib" the same as "not telling a lie“, it’s when your definition of "fib" is Fibonacci?
Fibonacci analysis has become main stream over the last several years and is available in most popular charting platforms today. For at least the last 50 years technical traders have used these Fibonacci ratios to help them decide where potential turning points may occur. There are 4 main types of Fibonacci levels that traders will use in today's software.
The 4 main Fibonacci projections that many traders use are:
Extensions- take the range from pivot #1 to pivot #2 multiply that distance by a Fibonacci number, add the two numbers together and it will give projections into the future where a possible turning point could be.
Expansions- take the range from pivot #2 to pivot #3 multiply that distance by a Fibonacci number, add the two numbers together and it will give projections into the future where a possible turning point could be.
Alternates- take the range from pivot #1 to pivot #2 multiply that distance by a Fibonacci number, add that to Pivot #3 and it will give projections into the future where a possible turning point could be.
Retracements- take the distance from a #1 pivot to the #2 pivot and take a portion of that range that is commonly less than 100%. The most common ratios are 38.2%, 50%, 61.8% and 78.6%. This is usually more beneficial from higher timeframes when determining reversal areas.
These Fibonacci levels in these charts were created by Nexgen Software Systems Inc. using NinjaTrader charts.
Please contact Jeff Yasak for more information on how you can take advantage of the Fibonacci projections by using Nexgen software with your RJO Futures account.
Series 3 Licensed
Senior Commodities Broker
Jeff studied finance at the University of Wisconsin-Madison and at Loyola University. He left the corporate world in 1995 to pursue his dream of working in the financial markets. Jeff's trading career began as a clerk in the S&P 500 pit at the Chicago Mercantile Exchange. This is where he developed a great interest in the options market that led him to the retail futures business. Jeff spent a few years as a broker's assistant before managing clients of his own..... Read More