How To Generate Forex Signals Using Fibonacci Retracement,Trendline & 30EMA Moving Average

The Fibonacci retracement tools plays a vital role in technical analysis of the forex market because it particularly helps to gauge the extent of a retracement or correction  and extension of a trend during resumption.While there could be diverse methods of drawing the tools, the conventional method will be discussed here.
So, the Fibonacci retracement tools is usually drawn from swing low to swing high in a downtrend with the 0%  level on the swing low and 100% on the swing high. In a downtrend, a rise in price is considered a minor trend or retracement of the major trend.

The chart above shows a bullish retracement or a minor uptrend in a major downtrend and it also indicates  that Fibo  0% is placed on the recent swing low and Fibo 100% is placed on the recent swing high. The chart shows that price retraced level 23.6, 38.2, 50.0 and broke above level 61.8.
The conservative traders do take the levels 38.2 and 61.8 as the most important retracement levels. However, observations from price actions have bountifully shown that level Fibo 50% tends to be more formidable in recent times.

The drawing is reversed during an uptrend.That, we have in an uptrend that the Fibonacci retracement tools is usually drawn from swing high to swing low such that the  Fibo 0%  is fixed on the swing high and Fibo 100% on the swing low. In an uptrend a fall in price is considered a minor downtrend or bearish retracement of the major uptrend  or bullish.

The  level 0.0 is placed on the recent swing high and level 100.0 is placed on the recent swing low on the chart above.The chart shows that price retraced down to level 50.0 and slightly below it without reaching level 61.8 then pulled back up from there.The two charts above show how fibonacci retracement are drawn both in an uptrend as well as during downtrend in the forex market.

Similarly, trendline connects two consecutive swing lows or two  consecutive swing highs.If the trendline rises from left to right then we have an uptrend

 and if it falls from left to right then we have a down trend.

Example 1 [EURUSD Signal for  (Nov.1 to Nov. 5 2016) ]
Base onthe current scenario in the market, I have updated the signal today the 2nd of November 2016.

 From the current EURUSD daily chart, it is obvious that price has broken the fibonacci resistance levels 23.6% (1.0972) , 38.6%  (1.1013) and 50% (1.1064). It is now approaching fibo 61.8% which is at 1.1114.Now all these previous resistance levels have become current support levels.Therefore a break below them should indicate a signal to sell the pair and target the next support because both trendlines and 30EMA moving average on daily are indicating downtrend.We have so far considered the retracement of the medium fall of  1.1278 to 1.0850. However, if 1.1278 is broken  then the whole analysis crashes and we start all over again.

 
Example 2 [EURUSD Signal for  (Nov.1 to Nov. 5 2016) ]
Now we want to use this method to generate signal for next trading week.

From the EURUSD daily chart above, we can see that price is moving well below the black 30EMA. This suggests a downtrend. The falling blue trendline also confirms the that the prevailing trend is bearish.Therefore we will consider any rise as a counter-trend move ( retracement of the fall). This means buyers should tread with greater caution under the current market scenario.Sellers have the resultant force in a bearish trend. Hence we are going to remain selling the pair next week until the market changes phase.
The signal is to sell when price pulls back to level 23.6 which is1.0950.
Therefore, we will sell the pair next week if price returns to 1.0950 with take profit 1 at 1.0850. Our stop loss will be 50 pips. I always recommend a risk of 1% or at most 2%. Happy trading!