Fibonacci Ratios Technical Analysis & Signals

Derived from the original Bollinger bands.

The Bollinger Fibonacci ratios is a volatility based indicators but it does not use the standard deviations to calculate the width of the bands instead it uses a smoothed ATR that are multiplied with Fibo ratios of 1.618, 2.618, & 4.236.

The smoothed lines that are multiplied with Fibonacci ratios are then added or subtracted from the moving average.

This forms 3 upper Fibo bands and Three lower Fibo bands

Middle band forms the basis of the market trend.

CFDs Analysis & How to Generate Signals

This indicator used to determine point of support and resistance for a cfd.

Lines below represent support points while those above are resistance levels.

Outermost bands provide the strongest resistance/support.

The inner most bands provide least support/resistance.

The innermost band represents Fibo 38.2% retracement level

The second band represents Fibonacci 50% retracement level

The outermost band represents Fibonacci 61.80% retracement level

This technical indicator is used to determine points where price might reverse. (Price Pullback Levels)

When cfds price hits one of the lines and reverses then an entry or exit signal is generated.

However, it's always good to combine the signal with other confirmation indicators such as the moving average to confirm the signal as displayed below.

Technical Analysis in CFD Trading