Fibonacci Clusters

I just recently heard John Carter mention fibonacci clusters as a tool that he will use more extensively this year.  He actually has an assistant that will be updating these as they form.  That is when you know you are a successful day trader, when you can actual hire an assistant to do the grunt work.

Fibonacci clusters are the combination of fibonacci retracement levels, all of which are drawn from different high and lows.  Most of you are probably accustomed to only using the latest high and low to draw your fibonacci retracement levels and removing the older one that no longer applies.  With fibonacci clusters, you just don’t remove the old retracement levels so that you have multiple levels on your chart.

Fibonacci clusters are used to indicate the most significant support and resistance areas.  I have drawn 3 separate retracement levels using different high and lows on the daily USD/CAD chart.   I’ve kept all the lines the same color because as clusters form, the line will appear thick.  You can see from this chart that a "significant" resistance level is at about 1.1635 and to a lesser extent where the price is now, 1.1526.  Fibonacci clusters are an interesting concept that I will have to explore furthur.

I haven’t seen it myself there is a webinar on CBOT that shows how you might use clusters to define trading opportunities:

http://www.cbot.com/cbot/pub/cont_detail/0,3206,1058+28951,00.html

Popularity: 1%