After all, Fibonacci retracement levels work best when the market is trending, so this makes a lot of sense!
Remember that whenever a pair is in a downtrend or uptrend, traders use Fibonacci retracement levels as a way to get in on the trend.So why not look for levels where Fib levels line up right smack with the trend?
Here’s a 1-hour chart of AUD/JPY.
As you can see, the price has been respecting a short-term ascending trend line over the past couple of days.
You think to yourself, “Hmm, that’s a sweet uptrend right there.
I want to buy AUD/JPY, even if it’s just for a short-term trade.
I think I’ll buy once the pair hits the trend line again.”
Before you do that, though, why don’t you reach for your forex toolbox and get that Fibonacci retracement tool out?
Let’s see if we can get a more exact entry price.
We’ll do that in tomorrow’s lesson.