Fibonacci Trading Strategy for Silver Daytraders
Many professional traders use the Fibonacci retracement tools to trade the silver with a great level of accuracy. Professional day traders who prefer to trade the solid support and resistance level uses the Fibonacci retracement tools and price action confirmation signal. One of the best tools for trading these patterns is the MetaTrader 4 download that is offered by FiboGroup.
The most significant retracement levels of this tool are the 38.2%, 50% and 61.8%.Fibonacci retracement level should be drawn from the most recent “swing Low to swing High” for uptrend and for downtrend “swing High to swing Low.”
Let’s see an example of Fibonacci trading setup in silver:
Figure: Trading the silver with Fibonacci retracement level
In the above figure, the most recent swing low and swing high of silver is used to draw the Fibonacci retracement level. The price retraces back and formed a nice bullish pin bar candlestick confirmation pattern right at 61.8% Fibonacci level. Professional day traders enter into the long trade in the silver with price action confirmation.
Stop loss is generally placed just below the candlestick confirmation pattern. Sometimes price action confirmation is often found in the 50% and 38.2 % retracement level. In such cases day traders put their stop loss just below the 61.8 % Fibonacci retracement level. Most of the case the most recent swing high is breached by the price after successfully rejecting the important Fibonacci level.
Trading the silver with Fibonacci retracement level is a little bit different than the currency pair trading. In the currency pair, a pending order can easily be set at Fibonacci level but while trading the silver no pending order should be set in the Fibonacci level. Most of the time there is a huge spike in silver in the important Fibonacci retracement level which will wash away all the pending trades. So it’s imperative that traders wait for price action confirmation before taking any trade in the retracement area.