Fib Ratios Technical Analysis & Signals
Derived from the original Bollingers.
The Bollinger Fibonacci ratios is a volatility based indicators but it doesn't use the standard deviations to calculate the width of bands instead it uses a smoothed ATR that are multiplied with Fibonacci ratios of 1.618, 2.618, and 4.236.
The smoothed lines that are multiplied with Fib ratios are then added or subtracted from the moving average MA.
This forms 3 upper Fibo bands and 3 lower Fibo bands
The middle band forms the basis of the market trend.
XAU/USD Technical Analysis and How to Generate Trading Signals
This indicator used to figure out point of support & resistance for a xauusd.
Lines below represent support levels while those above are resistance zones.
The outermost bands provide the strongest resistance/support.
Inner most bands provide least support/resistance.
The innermost band represents Fibo 38.20% retracement level
The second band represents Fibonacci 50% retracement level
The outermost band represents Fib 61.80 % retracement level
This technical indicator is used to identify points where the price might reverse. (XAUUSD Price Pullback Levels)
When price touches one of the lines and reverses then an entry or exit trading signal is generated.
However, it is always good to combine the signal with other confirmation indicators like the moving average to confirm the signal such as illustrated and shown below.
Technical Analysis in Gold
Study More Tutorials and Lessons:
- How Do I Set Alligator XAU USD Indicator in Trading Chart in MetaTrader 4 Software Platform?
- How Do You Add a Custom MT5 Indicator on MetaTrader 5 Platform?
- How Do I Use Support and Resistance Indicator in FX?
- How Forex Leverage Greatly Increases Forex Profits and Losses
- How to Place McClellan Histogram in MT4 Charts
- Learn FX Lessons and Guides Course for Beginner Traders
