This is the second article in a 5-part series about the Metatrader 5 Fibonacci Tools. In this article we are going to customize the Fibonacci Fan settings within Metatrader 5 so it can better identify major support and resistance levels. The customized Fibonacci Fan can be used also as a powerful stand-alone trading system.

In Metatrader 5 you can find the Fibonacci Fan tool under the menu Insert -> Objects -> Fibonacci -> Fibonacci Fan. First, place the Fibonacci Fan anywhere on the chart and go to the properties window:


Now, add 2 more levels: 0,764 and 0,854. After adding the new levels, the fan should be like this:


The main Fibonacci Fan levels are:

1: 0,382 - Signal Level
2: 0,5 - Mid-way
3: 0,618 - magnetizes the Target Level
4: 0,764 - Correction Level
5: 0,854 - Target Level

You can customize the description of within the Metatrader 5 Fibonacci Fan levels properties like this:



There are 3 basic models of the price movement within the Fibonacci Fan levels.

1. Rebound model, when the price is repelled ( bounces off ) from the current target level (0,854)
2. Bolt model, when the price, before reaching the current target level bounces off a level of the Fibonacci Fan with a higher priority ( higher timeframe )
3. Breakthrough model, when the price is breaking through the current target level, because it is attracted by a level of the Fibonacci Fan with a higher priority ( higher timeframe )






The price runs from the target level of the last Fibonacci Fan to the target level of current Fibonacci Fan.

A - previous fan
B - current fan
A1 - current target level (0,854)
B1 - support level and the target level for the future fan C-C1.

On the chart above you can see the Rebound model and the Breakthrough model in action. Usually, within the Bolt and Breakthrough model, the price reaches high volatility when it is reversing its course.


Target Level: After the price reversal, the target is set on the target level (0,854) of the previous Fibonacci Fan ( previous wave ). If we look at current EUR/USD position, the target for the major wave will be around 1.3000 end July/begin Augustus this year. Another important instrument are the Fibonacci Arcs, with this tool we can clarify the target level within a certain time period, it is the crossing of the Fibonacci Fan's target level (0,854) with the Fibonacci Arc's 0.764 level. I'm going to write about the Fibonacci Fan & Fibonacci Arcs combination in the next article.

There is a wonderful indicator that is build for Fibonacci Fan trading, Fiba +, currently it is available only for Metatrader 4. You can download it below with the indicator template. It draws the main Fibonacci Fan levels as described above and gives them priorities. Recommended time-frame for this indicator is H4.



Another important this is the Fibonacci Fan Mirror. You can create it buy reversing the price value in the properties windows of the Fan that you want to mirror:



The Fibonacci Fan Mirror can be used to identify resistance levels for the current price move within the current Fibonacci Fan. For example, if the price bounces off the 0,618 level of the fan mirror, the target level of the mirror becomes a major resistance. You can also use the Fibonacci Fan Mirror for placing stop loss or lock positions ( however as we know, in Metatrader 5 it's not possible :( ), the stop loss level should be placed above the mirror's target level 0,854. I'm going to write more about this in future articles.



There is also a indicator for Metatrader 4 that draws Fibonacci Fan Mirrors automatically, it works in combination with the Fibo + indicator, download it below:

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Downloads:
Download the Fibo + indicator
Download the Fibo + indicator template
Download the Fibo Fan Mirror indicator

This is the first article in a 5-part series about the Metatrader 5 Fibonacci Tools:

Fibonacci retracement is a very popular and extremely useful for setting the stop-loss and take-profit levels and strategic places for transactions. The notion of retracement is used in many technical indicators such as Gartley patterns, Tirone levels, Elliott Wave theory etc. Many traders use Fibonacci retracement indicators in their daily or long-term Forex trading. These methods are good known in the Forex community and have a lot of literature en resources about them. Fibonacci retracement is created by taking two extreme points (local top and bottom) and dividing the vertical distance by the key Fibonacci ratios as showed on the picture below. The horizontal lines are used to identify possible support and resistance levels.

In this article we are going to customize the Fibonacci settings within Metatrader 5 so that it can plot both retracements & extensions simultaneously.



In Metatrader 5 you can find the tool under the menu Insert >> Objects >> Fibonacci >> Fibonacci Retracement. On the chart simply do a random placement, place it anywhere on the chart, does not matter:



Then, Right-click anywhere on your chart where there is open space. Select Objects List from the pop-up menu ( or press Ctrl + B on the keyboard ) and left-click. Within the Objects window, select Fibo and then click on the Edit button. You should see this:



On the Fibo properties screen, use the Delete button to remove all existing levels. After that use the Add button to add the following values as shown below and click OK.



Main Fibonacci Retracements Levels:

Level 0 0.146 0.236 0.382 0.5 0.618 0.786 0.86 0.942 1 -0.18 -0.27 -0.382 -0.618 -1 -1.618 -3.236

Description 0.0 - %$ 14.6 - %$ 23.6 - %$ 38.2 - %$ 50.0 - %$ 61.8 - %$ 78.6 - %$ 86.0 - %$ 94.2 - %$ 100.0 - %$ 118.0 - %$ 127.0 - %$ 138.2 - %$ 161.8 - %$ 200.0 - %$ 261.8 - %$ 423.6 - %$

After that you should see the following prices and percentages appearing on the Fibonacci line labels:



As described above, a Fibonacci Retracement is created by taking a local top and bottom and dividing them with the vertical distance line:



Here are the C-to-D rules:

23.6% >> 118% | 127%
38.2% >> 138.2%
50% | 61.8% >> 161.8%
78.6% >> 0% | 161.%
86.0 >> 0%
100.0+ >> Reversal ( thanks to Black_Knight for the C-to-D rules)

In the future, i will write more about the trading techniques with Metatrader 5 Fibonacci Retracements. For example, you can draw the Fibonacci Retracement at the beginning of the day to know the direction of the movement expected and it is important to have two points of view, one large view, where the Fibonacci Retracement is located on the historical high and one other small view with the last daily high. Try to compare the moment position to these two Fibonacci levels and the daily pivot levels so you can locate the important support and resistance levels.

You can also read more about the trading here.

While we are waiting for the Metatrader 5 public beta i would like to share some interesting trading idea that is not based on indicators. It is based on the interconnection between the Forex market and the Futures market with the following trading sessions:

Pit (trading session from 13:00-17:00 to 20:00 GMT);
GLOBEX (open from 23:00 GMT).

According to many observations the forex market is adjusting to this market, the quotes differ only by some delta, except for JPY, CHF, and CAD. The futures market closes at 20:00 GMT on PIT and a certain SETT (Close) price is formed. It corresponds with the Close price of the 20:00 GMT price bar on the Forex market. This price is the future trading target. Near this price we can open some buy/sell limit orders with a range of 10-20pt. When the GLOBEX market opens (23:00 GMT) it will be tend to the SETT price. This principle is similar to the Gap Trading, when traders attempt to take advantage of the difference, or "gap," in price between the close of the previous day with the open of the following day.



Usually the target will be met within 4-5 hours. The failing percentage is around 10-15%. The best pair for this trading method is GBP/USD. This method does not work with crosses. The picture below show the statistics for GBP/USD for 2001-2005. The blue/green dots represent the successful buy/sell trades when the price met the trading target. The red dots represent the failed trades when the price did not return to the SETT price. As you can see the best range is between 10-20 pt.