Introduction to the Auto Fibonacci Indicator
Trend continuation setups that trade on pullbacks are excellent trade ideas. However, one key question would be where we should wait for the pullback. There are many areas where we could wait for pullbacks. Some trade pullbacks on broken support and resistance levels. Others simply wait for reversal signals after a pullback. Others would wait for a continuation pattern to form.
One effective way to trade pullbacks would with the use of the Fibonacci levels.
The Auto Fibonacci indicator is a tool which traders can use to objectively trade pullbacks based on Fibonacci levels.
What is the Auto Fibonacci Indicator?
The Auto Fibonacci indicator is exactly just as its name describes. It automatically plots a Fibonacci Expansion tool on the price chart based on the most recent major pivot highs and pivot lows. This may help traders determine areas where price may reverse based on a Fibonacci retracement.
How the Auto Fibonacci Indicator Works?
The Auto Fibonacci indicator bases its pivot highs and pivot lows on an underlying Zigzag indicator. It identifies the most recent pivot highs and pivot lows and plots the points of the Fibonacci Expansion tool on those points.
The Zigzag lines however are not drawn by the Auto Fibonacci indicator.
The variables of the underlying Zigzag indicator can be modified under the Inputs tab of the Auto Fibonacci settings.
How to use the Auto Fibonacci Indicator for MT4
As mentioned earlier, the Auto Fibonacci indicator plots a Fibonacci Expansion tool based on pivot highs and pivot lows. As such, it should be used as a Fibonacci Expansion tool.
One way to trade using this indicator is to wait for reversal signals that may occur on the area between 38.2% and 61.8% of the Fibonacci Expansion tool. The stop loss should be placed beyond the 23.6% level and the target take profit price should either be on the 100% or 161.8% level.
Buy Trade Setup
When to Buy?
Identify a chart where the Auto Fibonacci indicator plots a Fibonacci Expansion tool with zero at the bottom and 161.8% at the top. Wait for a bullishreversal signal on the area between 38.2% and 61.8%. Set the stop loss below 23.6%.
When to Sell?
Set the take profit target either at 100% or 161.8% and wait for price to reach that level.
Sell Trade Setup
When to Buy?
Identify a chart where the Auto Fibonacci indicator plots a Fibonacci Expansion tool with zero at the top and 161.8% at the bottom. Wait for a bearish reversal signal on the area between 38.2% and 61.8%. Set the stop loss above 23.6%.
When to Sell?
Set the take profit target either at 100% or 161.8% and wait for price to reach that level.
Conclusion
The Auto Fibonacci indicator can be useful tool for anticipating possible reversal points on retracement areas. The trade setups it could produce are still trend continuation setups but are based on a pullback.
Since the Auto Fibonacci tool does not provide entry signals, it is best to trade this with a reversal signal indicator. Traders can also base reversal signals on reversal candlestick patterns.
MT4 Indicators – Download Instructions
This is a Metatrader 4 (MT4) indicator and the essence of this technical indicator is to transform the accumulated history data.
This MT4 Indicator provides for an opportunity to detect various peculiarities and patterns in price dynamics which are invisible to the naked eye.
Based on this information, traders can assume further price movement and adjust their strategy accordingly. Click here for MT4 Strategies
Recommended Forex MetaTrader 4 Trading Platform
- Free $50 To Start Trading Instantly! (Withdrawable Profit)
- Deposit Bonus up to $5,000
- Unlimited Loyalty Program
- Award Winning Forex Broker
- Additional Exclusive Bonuses Throughout The Year
>> Claim Your $50 Bonus Here <<
How to install MT4 Indicator?
- Download the mq4 file.
- Copy mq4 file to your Metatrader Directory / experts / indicators /
- Start or restart your Metatrader 4 Client
- Select Chart and Timeframe where you want to test your MT4 indicators
- Search “Custom Indicators” in your Navigator mostly left in your Metatrader 4 Client
- Right click on the mq4 file
- Attach to a chart
- Modify settings or press ok
- And Indicator will be available on your Chart
How to remove MT4 Indicator from your Metatrader Chart?
- Select the Chart where is the Indicator running in your Metatrader 4 Client
- Right click into the Chart
- “Indicators list”
- Select the Indicator and delete
(Free Download)
Click here below to download:
