What is the Daily Fibonacci Pivot Trade Strategy?
Daily Fibonacci Pivot Trade Strategy is a forex trading strategy that applies the Fibonacci retracements in confluence with daily pivot levels to spot entry points for trades.
It is as much the best forex trading strategy as it is a simple strategy for Olymp Trade.
The Principle Behind the Daily Fibonacci Pivot Trade Strategy.
The Daily Fibonacci Pivot Strategy has a very simple principle behind it.
When trading with it, watch out for confluence between specific Fibonacci levels with the daily pivot level.
What do I mean by Fibonacci levels?
Fibonacci levels are a chart analysis tool on Olymp Trade Charts.
All you need to do is to just apply the tool on your chart and it will paste different levels and lines on your charts. Levels such as 0.236(23.6%), 0.382(38.2%), 0.5(50%), and 0.618(61.8%).
These readings and levels are what we refer to as Fibonacci levels or retracements.
What are daily pivot levels?
A daily pivot level is a level on the daily price chart where the price tends to reverse in the opposite direction and never reaches the level ever again during that day.
That level, therefore, acts as a pivot such that once the price reaches there, it reverses in the opposite direction without ever reaching that level again during that day.
Daily pivot points or levels can be calculated, but only in retrospect because you will need the highest price of the day, the lowest price of the day, and the closing price of the day.
You will then add the three prices and find their mean by dividing by 3. That will give the price level which was the daily pivot level of the day in question.
Now, we said that the Daily Fibonacci Pivot Strategy utilizes the confluence between Fibonacci levels and Daily Pivot levels.
Can that really happen?
Yes, it happens that the same level where the daily Pivot level falls coincides with one of the Fibonacci levels like 0.236, 0.382, 0.5, or 0.618.
It is when the daily pivot level coincides with (lies very close or exactly at the same level as) one of the Fibonacci levels that entry into the market is signaled.
You can choose to wait for the formation of the reversal-cum-signal candlestick then enter.
If the coincidence happened when the price was rallying downwards, you will expect a reverse upwards and the opposite if the coincidence happened on an uptrend.
Most traders prefer to enter trades when the daily pivot level coincides with 0.382, 0.5, or 0.618 Fibonacci levels. However, coincidence with 0.236 is also a viable signal.
That is the simple principle behind the simple Daily Fibonacci Pivot Trade Strategy. Let’s now proceed to make money with this strategy.
Trading the Daily Fibonacci Pivot Strategy in Olymp Trade.
So much knowledge of the strategy yet you cannot make money using it?
Let us now see how we can actually make money on Olymp Trade trading the Daily Fibonacci Pivot strategy.
Trade using the Daily Fibonacci Pivot Strategy in the following simple steps:-
- Identify the Initial Trend.
- Calculate the Daily Pivot Level of the Previous Day.
- Wait for Fibonacci and Daily Pivot Levels to Coincide.
- Wait for the Trend Reversal Confirmation.
- Enter Buy or Sell position.
- Adjust your Stop Loss.
- Adjust your Take Profit.
1. The Initial Trend Identification.
It is important to be in the know of what the initial or current trend is so that when a confluence happens, you will know which direction to place your trade towards.
If the current price is on an uptrend, then once the confluence happens and a reversal is confirmed, you will know that you are Selling.
If you are currently on a downtrend, then after a confluence and successful confirmation of reversal, then you know you will enter a Buy position.
2. Previous Day’s Daily Pivot Level Calculation.
Add the highest price of the day, the lowest price of the day, and the closing price of the day.
Divide what you get by 3 to get the price level at which the Daily Pivot Level of that day was.
Today’s Daily Pivot level will be expected to be close to yesterday’s, if not at the same level.
3. Fibonacci Level – Daily Pivot Level Coincidence.
You have already established a probable level where the daily pivot of the day is likely to be.
See which Fibonacci level coincides with or is close to that same level you have identified.
You then need to keep observing until you see the price come to the probable daily pivot level. That way, it will have coincided with the Fibonacci level at that same level or very close to that level.
After this is met, don’t rush. Proceed to the next step.
4. Trend Reversal Confirmation.
What we expect when the price reaches the daily pivot point or level in coincidence with a Fibonacci level is a reversal of the initial trend to the opposite.
A number of things ranging from technical indicators, support and resistance, candlestick patterns, and others have a way of signaling a trend reversal.
Technical indicators showing overbought conditions, coincidence with a resistance level, and bearish reversal candlestick patterns like the bearish engulfing and others will show that truly, a downward reversal is imminent.
If you spot one or several of these on a trend that was initially upwards, then they confirm that a downward reversal is coming.
Technical indicators showing oversold conditions, coincidence with a support level, and bullish reversal candlestick patterns like the hammer or bullish engulfing will point to an imminent upward reversal.
If you spot any or several of such on a trend which was initially downward, then they confirm that an upward reversal is looming.
If a reversal is confirmed, then you proceed to the next step but if it is not, then you would rather not.
5. Buy or Sell Position.
A successful confluence and an upward reversal confirmation call for a Buy position. A successful confluence and a downward reversal confirmation, on the other hand, call for a Sell position.
6. Stop Loss Adjustment.
Your stop loss is ideally supposed to be at the closest lower next Fibonacci level for your Buy position and at the closest upper Fibonacci Level for your Sell position.
7. Take Profit Adjustment.
Your take profit as well would be enough if tied to the closest Fibonacci level. At the closest upper Fibonacci level for your Buy position and at the closest lower Fibonacci level for your Sell position.
Daily Fibonacci Pivot Strategy, one of the best forex trading strategies. It also happens to be one of the simplest forex trading strategies. Apply it on Olymp Trade today and enjoy making money.