Fibonacci Ratios Commodity Trading Technical Analysis & Trading Signals

Derived from the original Bollinger bands.

The Bollinger Fib ratios is a volatility based indicators but it doesn't use the standard deviations to calculate the width of the bands instead it uses a smoothed ATR that are multiplied with Fibo ratios of 1.618, 2.618, and 4.236.

The smoothed lines that are multiplied with Fibo ratios are then added or subtracted from the moving average.

This forms Three upper Fibonacci bands & Three lower Fibonacci bands

The middle band forms the basis of the trend.

Commodity Trading Technical Analysis & How to Generate Trading Signals

This commodity technical indicator used to determine point of support and resistance for commodity.

Lines below represent support points while those above are resistance levels.

Outermost bands provide the strongest resistance/support.

Inner most bands provide least support/resistance.

The innermost band represents Fibonacci 38.20% retracement level

The second band represents Fib 50% retracement level

The outermost band represents Fib 61.80% retracement level

The indicator is used to determine points where commodity price might reverse. (Commodity Trading Price Pullback Levels)

When commodity price hits one of the lines & reverses then an entry or exit trading signal is generated.

However, it is always good to combine the signal with other confirmation indicators such as the moving average to confirm the signal as shown below.

Technical Analysis in Commodity Trading