There's a New Game in Town

Over the years, Traders have many different schemes and techniques to determine key price levels, commonly known as SUPPORT and RESISTANCE PRICE LEVELS.

About a decade ago, I encountered so many different ways to find these key levels, using Stochastics, MACD, Bollinger and Keltner Bands, Moving average crosses, 200 day MA's, and so on and so forth.  NOTHING WORKED WITH REGULARITY.

Then I discovered, quite by chance, a trading and management technique using fibs (or Fibonnacci trading).   Many traders miss the fact that the Computers driving the market use these FIB ranges to enter and manage trades.   I learned these methods intimately and use them to this very day.

However, there are FIBS inside of FIBS, or FIB RANGES used that are not necessarily connecting the highs and lows of any range.   For example, if a reversal occurs and then price moves swiftly past the initial targets (shown in green in the charts contained in this article), price can sometimes reverse in ranges far smaller than anticipated.   That is because the very next trades are connected to the ZERO LINES of the last trade that just completed.  The ZERO LINE is defined as the HIGH in a long setup that established the very last RANGE that traded. 

IN a short FIB SEQUENCE, the LOW POINT or ZERO LINE of the very last RANGE can be used as the new 100 mark in a FIB sequence.

More in my next article.

Dave Trader