This week we review the EURAUD for our report…
The Fibonacci labels have been round for centuries, however it is still amazing to see them at work in our current modern trading charts. The EURAUD is relatively new in terms of existence, although it too does react to the natural numbers.
On todays example we see the major low marked A which occurred Feb 22, 2017 from where a strong rally started to point B which is March 28, 2018.
When I put a Fibonacci levels tool on a chart I want to see the market reacting to the levels, this gives me confidence that the tool is in the right place and the levels can be used with confidence in the future. Notice that before the top at B came in, the market reversed at points C and D before point B was created. This simple means that points A,B,C and D are in Fibonacci proportion.
Which inevitably gives me great confidence in these levels should they ever be tested again in the future.
Now notice point E is very close to a Fibonacci level between points A and B but is also reacting to the same price pressure levels from C and D. This is a clear warning to look for any signal of reversal or lack of selling momentum at point E which eventually does appear, so any shorts need to be closed out.
Point F is another fabulous opportunity where the 76.4% level provides support, it may not be immediately obvious but once the market breaks cleanly above the old tops around 1.5950 it is a buy signal and so far it has provided excellent profit, a clear and simple case for the use of the natural Fibonacci levels.
Back to point E which is 145 calendar days from point D, 144 is the Fibonacci number that Gann stated at one time was his greatest discovery. ( The Fibonacci series is 0,1,1,2,3,5,8,13,21,34,55,89,144,233 and so on) This means we then have a Time factor to enhance the importance of point E.
So here we have a Time factor and Price factors from the Fibonacci series on one chart. It obviously pays to take the time to know where these levels are….
Best wishes to all,