The Asian session saw a big fall on Euro against the Yen on Thursday. Technically, it was very obvious on the chart and I did a short trade on the currency pair. I had mentioned Fibonacci trading last Friday as one of the methods I used. I will show you how I did it with this short trade. During the early US session on Thursday morning Eastern Time, you should see that the price moved upwards to 156.84 before a bearish 15-minute candle started the downtrend. Keeping in mind that the low was 155.54 and then the recent top was at 156.84, we calculated that the retracement should see some support at 156.04 area (see the attached calculation on the right below).
I entered this short trade because I got a signal from my setup and it was aligned with the main day movement (downtrend). I then entered the price at 155.45 with stop-loss at 20 pips away. I set my profit target using my own calculated price 156.20 near the 61.8% retracement area. About 25 minutes later, the short position was done with a 25-pip gain. Why I entered at 156.45 was because on the 5-minute chart, there was a rejection at 156.58 which is the Fibonacci 38.2% level (155.84 to 155.42), therefore I entered at that price (also see the right calculation on the picture above).
I wanted to post as many trades as possible, but as you know, it is rather tedious to draw and attached the charts than just writing out in words. I hope this example will gives you yet another positive aspect on Fibonacci trading in the Forex market.
