Prtactical Exercise #7:

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    Gustaf ErikssonGustaf Eriksson

    EUR/USD Daily Chart, showing entry and exit (stopped out) between mid December and late March. I’ve drawn the trendlines as they might have been drawn at the time, not after the event, and a couple of trailing stop lines. Arrows mark entry and exit. Would have been a tidy profit …!

    Also EUR/JPY 4 Hour Chart, showing Fib Retracement levels. I suspect the impressive “down” bars on the 14th and 22nd may be caused by some economic announcements, so I’d probablay have exited any trades before that.  I haven’t drawn Fib levels on the move commencing on the 20th, but that fits well with the Fib tool.

    What is interesting is if I’d exited the trade at the 138.2 level, if so a nice tidy profit, waiting would have meant a larger profit but only assuming I didn’t move the stoploss down.

    Interesting that the Fib levels are respected even when there are large moves!


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    Rich FittonRich Fitton

    Hi Gustaf,

    As you practice more and more you’ll see the currency markets behave very technically – they respect things like fib levels time and time again (not always of course, but enough to give an edge) and when you have 2 or 3 devices all pointing to a particular price area it can give you a strong idea of how you might be positioning yourself to benefit.

    The fib levels thing always intrigues me… is it really down to some kind of ingrained behavioural trait in humans (and therefore the markets) or is just the fact that the levels are so widely followed they become a self-fulfilling prophecy? Who knows, as long as they keep working 😉

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