FX.co ★ GBP/USD: Theory on Numerical Analysis.

Use time frame of M15 to determine the lower and the higher price of yesterday, because it's more precise.

Tip: Some traders make a mistake on how to use the Fibonacci.

The Fibonacci retracement is VALID only if the price movements on daily basis, it should be between lower and highest price of that day.

Tuesday's historic (20th of December 2011).

Open: 1.5498
High: 1.5700
Low: 1.5496
Close: 1.5659

Function = (High - (High - Low)) * 38%.

The market will indicate a bullish opportunity on level of: (Low - (Function / 100)) = 1.5620.

Pivot Point (1) = (High + Low + Close) / 3 = 1.5618.

If the price close below the pivot point by 40 pips to, then the market will indicate a bearish opportunity on level of 1.5575 (+Spread).

Take Profit Formulas:

Sometimes the market seems that it doesn't follow our forecast, therefore in order to get out spank from the market before losing your profit.

Then you have to calculate the Market Movements.

Market Movements = (High / (High + Low)) * 100

• If Market Movements is between 50.20 and 50.40, so it should close your position after 1H:30M (Around 40pips to 60pips).
• If Market Movements is between 50.40 and 50.60, so it should close your position after 3H:15M (Around 80 pips to 120 pips).
• If Market Movements is between 50.60 and 50.99, so it should close your position after 8H:00M (Around 140 pips to 200 pips).

Apply Formulas:

Market Movements = (1.57 / (1.57 + 1.5496)) * 100

Market Movements = 50.32

Trading Recommendations:

According to previous events, the price has still been trapped between 1.5420 and 1.5750

• Buy above 1.5622 (61,8% of Fibonacci retracement levels) with a first target of 1.5840, it might resume to 1.5830.
• Below 1.5575 (38.2% of Fibonacci retracement levels) look for further downside with 1.5420 and 1.5350 targets.

Technical Levels:

R3: 1.5945
R2: 1.5822
R1: 1.5741
PP: 1.5618
S1: 1.5537
S2: 1.5414
S3: 1.5333

Tools of Chart:

• It should be noted that the market was so stable and trend was also so clear (uward).
• Range was: 204 pips (upward).
• The value of 50% Fibonacci retracement levels is: (High + Low) / 2 = 1.5598. (The key level to confirm a bullish market).
• Volatility is 318.20 so the market has called for a high volatile.

Observation (s):

• Please check out the market volatility before investing, because the sight price may have already been reached and scenarios become invalidate.
• Use historic prices to determine future prices.
• Fibonacci retracement uses to determine accurate psychology level of support and resistance, and playing according to in this kind of period.
• Fibonacci in a range trader (it is looks like the trend is trapping and going up or down, if you sell or buy for a long term in this period you'll go sure for losing your profit.

Warning (s):

• Stop Loss should NEVER exceed your maximum exposure amounts.
• Usually the market has a high volatile, if the last day had a huge volatility.