Fibonacci tools in MT5
The beauty of financial markets is that not a single trader on the planet is limited in the way they can conduct technical analysis of the market and in the selection of tools that are needed for this.
Many of the proposed options previously seemed completely fantastic, but later won the favor of traders.
The situation was the same with Fibonacci tools; for a long time, technical analysis using them aroused skepticism, but today the situation has changed radically.
Moreover, it has become possible to automatically construct graphical Fibo objects; this function is available in the MetaTrader 5 trading terminal.
Brief description of Fibonacci tools
The MT5 trading terminal is a godsend for traders who want to use Fibonacci tools in practice.
These tools allow you to forget forever about the problems of defining goals, and with their help you will always know where the price will soon approach.
You can find the Fibo tools themselves in your MT5 in the “Insert” - “Objects” - “Fibonacci” menu.
The MT5 trading terminal is represented by the sixth Fibonacci instruments - “Fibonacci Lines”, “Fibonacci Time Zones”, “Fibonacci Fan”, “Fibonacci Arcs”, “Fibonacci Channel”, “Fibonacci Extension”.
In order for you to generally understand the purpose and functionality of each of the Fibo tools, we suggest that you familiarize yourself with a brief description of each.
1. Lines
This tool performs the main key task, namely finding correction levels. In fact, the “Lines” show the trader how many percent of the marked trend segment a correction .
The key levels are considered to be 38.2, 50, 61.8, since near them there is a high probability that the end of the rollback will occur.
The indicator is very simple to construct, because you only need to connect the point at which the movement began and the maximum point of the trend, after reaching which the rollback began.
From a practical point of view, positions should be opened from levels 38.2, 50, 61.8 for a rebound in the direction of continuation of the trend.
A breakout of 61.8 indicates that the formed pullback has become a new trend, and the existing trend has ended. The instrument can also be used in SL and TP settings.
2. Time zones
Time zones are a graphical tool, the main task of which is to show with vertical levels on the chart possible zones of instability when the trend is likely to be tested or a surge in activity will be observed.
The construction is quite simple; you need to connect a short section of the nearest minimum and maximum to each other.
Time zones are one of the most mystical tools, since it does not give clear recommendations for action, but only reports possible price changes at certain points.
3. Fan
The Fan, unlike the two previous tools, is a trend graphical tool that clearly indicates the direction of the trend, but also shows us how much percent the price has deviated from the global trend.
The use of a fan is in many ways similar to trading from trend lines, because positions are opened, as a rule, only in the direction of the rebound trend from the levels.
The breakdown of the most recent ray is comparable to a trend line breakout signal, namely, it will indicate that the trend has changed.
The construction of a fan follows exactly the same principle as lines; it is necessary to connect the maximum and minimum points of the selected trend price segment.
At the moment when the maximum point is overwritten by the price, it is necessary to rebuild the instrument.
4. Arcs
Arcs operate in many ways similar to a fan; moreover, these tools are usually used in pairs, because the intersection points of arcs and rays are the strongest zones of support and resistance.
The construction of arcs occurs in exactly the same way as lines, namely, you will need to connect two local extremes with a trend line, the correction of which you want to trade.
5. Channel
The Fibonacci channel from a practical point of view is no different from the classic parallel channel, except for the fact that in addition to the range, additional lines are constructed that can act as support and resistance.
It is built like an ordinary parallel channel; for this you will need to place two trend lines parallel to each other at the extremes.
6. Expansion
Expansion is one of the main tools in Eliot's wave theory, since it is with its help that the location of the end of the third wave is determined.
It is also used to clearly define target points and price movement potential. It is built according to two waves, the first, with which the movement begins, and the second, which is a kind of rollback.
To summarize, it should be noted that MT5 is one of the most functional terminals currently existing, and it is in it that you can find the widest range of Fibonacci tools.
You can find other interesting tools in the section - http://time-forex.com/skripty