Fibo Reversals is an indicator which has carefully been put together to attempt to indicate a time period in which an ongoing trend is most probably exhausted and a new trend (actually a reversal trend) inadvertently begins. At this, it should be okay for the manual trader to be on the look out for good trading opportunities.
- Father Fibo - This input is critical to determining the range of bars (deviations in history bars) within which an appreciable peak was formed. Father Fibo is primarily responsible for the calculation of the indicator's Main Line but it also functions to help determine the input combination which goes into the calculation of the end value of the Signal Line.
- Son Fibo - This value supports the beginning bar for the Main Line but it also functions to help determine the input combination which goes into the formation of the end value of the Signal Line.
- Holy Spirit Fibo - This value majorly functions to help determine the input combination which goes into the formation of the end value of the Signal Line.
- Reversal Depth - This value is crucial in determining the depth at which a comfortable reversal should take place. Fibo Depth places the already calculated value of the Main Line at a relative depth from the highest bar. Conveniently, this value may be left at 0.5 which is a midpoint between Highs and Lows.
When the Main Line is apparently horizontal
- Sell when the Indicator's Signal Line crosses nearly vertically downward and falls below its Main Line.
- Buy when the indicator's Signal Line crosses nearly vertically upwards and rises above its Main Line.
- Be sure the Signal Line is almost vertical to its Main Line (not less than 45 degrees to and while crossing the Main Line upward or downward).
- It is suggested that the trader should download the free 'ComBo Trend' indicator. Using similar inputs, the manual trader is expected to be better at trading decisions.
- It is recommended to scout an uptrend for a sell trade while a buy trade may be lingering in a downtrend; however the entry rules should strictly be adhered to.
- Use of the lower timeframes such as M1, M5 & M15 may turn out to be better, however, the larger timeframes can be looked into as well.
- The adjudged new trend may become irrelevant (no longer in force) after certain number of bars past after the upward or downward cross may have taken place.
- As the very end of the newly formed trend cannot be predicted, it is not recommended to stay too long in the markets. Do not stay beyond your chosen set bar duration.
- Please apply discretionary money management rules.