Fibonacci, fractals, RSI, CCI, Pitchfork Tool, Volume, Gap And Scalping Trading Tips And Tricks
Fibonacci Time Zones
The first time I read about Fibonacci time zones, I liked it straightaway. My imagination also became very wild because I guessed then that one can use them in many ways in the financial
I hope by the end of this article, one understands why I get hooked to it from the get go. Without keeping you waiting any longer, let's find out more about the Fibonacci time zones. Don't we?
What Is Fibonacci Time Zone?
A Fibonacci time zone is a zone on the time scale that coincides with Fibonacci levels when one applies the Fibonacci tools to the time scale on any stock chart.
Normally, Fibonacci traders apply Fibonacci measuring tools to the price-action (price scale). This time, one is applying it to the time.
Purpose Of Fibonacci Time Zones
The main purpose of the Fibonacci time zones is to predict when (at what point on the time scale) is a reversal or swing will occur.
Those Fib time zones are highlighted by vertical lines. Practically, it does not mean that a reversal will take place by all means as soon as the price tags that time zone.
It just means: "Hey George, slow down a bit because the price may acknowledge that zone by pausing a bit or pulling back a bit or start a full reversal. Be ready to secure your gains and keep your eyes wide open without blinking". It makes sense. Doesn't it.
Fibonacci Time Zones Reactions
Believe it or not there are times when the price will reverse as soon as it touches that zones.
If that happens, know that probably it is a combination of other factors that helps the reversal. It is not magic or always the same thing, but the good news is that it did not take one by surprise because one was aware of it. That is the beauty of the Fibonacci time zones.
Other times, one will notice that the reversal will occur a little bit earlier or later from that precise zone.
Suppose the Fibonacci time zone coincides with 16 August on the daily chart. The reversal can occur after few days or weeks. Sometimes, it will not happen at all. What are you going to do about that?
Please do not try to call it a reversal if there is no reversal.
Most reversals that coincide with a specific Fibonacci time zone are due to a combination of many other factors instead the time zone alone.
Fibonacci Time Zones Versus Elliott Wave Forecast
The key similarity between Fibonacci time zones and Elliott wave forecast is that both help to forecast the financial markets. The Fibonacci time zones allow one to forecast the possible time zone when the price will exhibit a high or low.
On the other hand the Elliott wave forecast helps to predict how the price will move (future price structures) before it starts. In both cases, it is just an expectation that the price must confirm. Never go ahead of the price action.
Nevertheless, both the Elliott forecast and Fibonacci time zones will help a clever market player to have an edge because one is aware of the probability that something is about to happen before it becomes public. Call yourself an insider.
Though the Elliott wave forecast is a more advanced market predictions tool, an Elliott wave trader who dismisses the Fibonacci time zones is like a driver in car without the hazard lights. Indeed, one can combine both the Fibonacci time zones with an accurate Elliott wave forecast. That can only help.
Please do not worry because I will be adding relevant videos at 24Elliottwaves YouTube channel in due course to demonstrate how to combine the Elliott wave forecast and Fibonacci time zones more precisely.
Where To Find Fibonacci Time Zones Drawing Tools
I use TC 2000 and tradingview trading platforms. And like many other platforms, one is likely to find them under drawing tools. If you have any difficulty finding them just visit their websites where they usually post helpful video tutorials. It is just easy.
How To Draw Fibonacci Time Zones
As I have already stated it earlier, there is so much one can do with the Fibonacci time zones drawing tools.
I was surprised that most people just keep using it the same way. In fact one of the reasons why I am busy writing more trading articles is because I am tired of reading the same things that practically are not helpful to active traders and investors.
And, I mean it. The same thing I have noted when it comes to drawing trend lines. So people only connect a low with a higher low, and a high with a lower high. That is it. There are many other ways one can draw a trend line.
For example, one can connect a high with a higher high, but also a low with a lower low. As I am writing this article today on 15 May 2020, on the monthly chart of all major stock indices, one ought to connect a high to a higher high and a low to a lower low.
So what am talking about? Do not limit yourself when it comes to using the Fibonacci time zone tools. Just ask the question: how about using it this way or that way? Just be sure to apply it to the time scale.
A better way to explain how to draw Fibonacci time zones is to draw them in front of people. Right? Well I have done it already. Please watch the video below.
What I have shown in that video should not make one think that that is the only way one can draw the Fibonacci time zones. In the near future, I will be recording Fibonacci time zones videotutorials to demonstrate other ways one can draw them. Those videos will be posted at Dayprotraders YouTube channel.
Methods Similar To Fibonacci Time Zones
On the time scale (x axis on the chart), one can measure (horizontally) the distance between two highs or two lows and horizontally project it on the time scale (x axis) from the end of the initial measuring stick.
You did not get it. Did you? Do not worry because when it comes to drawings, a video is the educational medium that can help. And I will record it in due course.
Suppose there was a high on the 16th August 2018 and another high on 07th December 2018 on the daily chart. One will draw a vertical line through each date. One line will be drawn through August 18th and another through 07th December. Next, one will measure the distance between those two vertical lines, then one will horizontally project that distance from Dec 07th on the time scale.
Does it make sense now?
The end result is a terminal point where one will draw another vertical lines. Again, there is no limit to what one can do to forecast when a pivot point will be in place.
All one is trying to do is to use events that happened in the past (price-action related to time or period) to forecast a time (in the future) when a similar occurrence is likely. Alright? Good.
Keeping Eyes Wide Open
It is always useful that one takes note of past occurrences on the time scale if one is a specialist trader or investor of a basket of financial instruments.
Some instruments may be forming a high or low at almost the same period on a particular time frame. Consequently, all one needs to do is to look, spot it or be familiar of the events on the time scale. Am I making sense or not? I hope so.
Best Times Frame For Using Fibonacci Times Zones
I like use the Fibonacci times zone on the monthly chart.
I bet you already knew that if you have been following us for a while. I would say one is better off using the monthly or higher times frame. Generally, one can use it on any time frame.
Allow me to say that one can also draw them on the monthly chart then switch to the daily chart for trading setups on that time zone (vertically). The same tactics is OK with yearly and monthly charts. That is it really because I can go on and on talking about many ways one can use the Fibonacci time zones.
Like everything else; one can get good at it if one really likes it and wants to master it. More practice, a bit more push without giving up will help one become an expert. The trick is to continue to learn and review also every step. Am I talking too much again? I hope not. Alright you get it.
Traders at the step one of the ladder of trading and investing will be itching to use the Fibonacci time zones on the lower times frame. That is understandable because they are beginners. Just remember that it is not as reliable as it is on the monthly or higher times frame.
For those traders, at least draw them on the 4H or 2H charts before heading to either 15M, 5M or 3M chart to play with it. Even a beginner can draw them on the monthly chart then switch to any lower times frame such as 3M, 5M or 15M.
One can rest assured that Fibonacci traders just like the elephants do not forget the Fibonacci time zones. Therefore, it is prudent that one takes note of the Fibonacci time zones as the price is reaching them.
Though the Fibonacci time zones give market players an edge like the Elliott wave forecast, one should not assume that a high or low (pivot) will definitely be put in that time zone. Do not be surprised if those pivots or price-swings are formed just before or after the Fibonacci time zones.
Sometimes, due to the combination of other factors, a high or low will take place on that spot as expected. It is just a reasonable expectation that the price must confirm. Please go easy with the Fibonacci time zones. Trade around those time zones like a pro by following the trading drill (setup-signal-entry on different times frame).
That is it Fibonacci friends. If this article is useful, please share and bookmark it. Please say few good words about us in your favourite Fibonacci trading forums if you think we have done a good job.
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