How to use Fibonacci in Forex

I use my fib settings upside down ! (I can't remember why, but I think it may be fx bootcamps method). This way seems more logical to me. In the following example I have set the fib tool in metatrader in an upwards direction.

Price has obviously been going up. Therefore I have set the fib from the top of the days highest candle wick (100%) to the lowest (0%).

I am looking for price to pullback for a further long entry. The main fib area of interest is the 50% & 61.8% areas. If price in this area starts to show signs of reversing back up I would go long (buy). This would be with the trend that is obviously going up.

I would also be looking for other clues; emas crossing, reversal candles, macd,
rsi indicators etc to confirm. As I said before, I don't trade off just 1 particular tool, but rather look for a number of them coming together at the same time to give me more confidence in placing a trade.

If, however the price was to fall (& close) below the 78.6 level I would consider that price has broken back down. Therefore would start looking for clues to go short (sell).

In the following example we have a text book fibonnaci move. This was on the cable (gbp/$) 4 hour chart february 2009. As you can clearly see, price retraced to EXACTLY 61.8 of the previous move down. Price then went to EXACTLY 121.4 fib.

TIP: You will often find with fibs that a 61.8 retracement will go to 121.4. A 50% will go to 100%. These are all clues for areas to exit/take profit.

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