The Auto Fibonacci Trading Zones technical forex indicator for Metatrader 4 displays two trading zones along with the most significant Fibonacci levels on the chart. This indicator helps you identify overbought and oversold trading zones on the chart. The blue trading zone is regarded as support zone. When the overall market trend is rising, traders hunt for buy trading opportunities. The red trading zone is seen as resistance zone. When the overall market trend is downward, traders hunt for sell trade opportunities. The colors of the trading zones can be modified straight from the indicator’s inputs tab.
What is the Autofib Tradezones Indicator?
AutoFib TradeZones is a price-level analysis indicator that plots Fibonacci levels on MT4 charts automatically. Because Fibonacci is an internationally recognized technical tool, it may be applied to any form of trading asset, including forex, equities, cryptocurrencies, commodities, and so on. This indicator primarily detects potential price pullback zones, particularly in an on-trend market. Expert day traders, on the other hand, employ Fibonacci levels to anticipate countertrend and swing entry situations. If you are familiar with price market indications such as candlestick patterns, you may be able to easily spot probable buy/sell entry levels when using the AutoFib TradeZones. Furthermore, it works with any timeframe from 1-minute to monthly charts, allowing you to do scalping and intraday trading at the same time.
Autofib Tradezones Strategy
AutoFib TradeZones calculates the distance between the most recent market high and low for use in deploying Fibonacci levels. It draws six horizontal lines to represent the Fibonacci retracement levels of 23.6, 38.2, 50, 61.8, 76.4, and 100%. The bottom blue horizontal zone denotes the final buy zone. The red zone at the top, on the other hand, establishes the sell zone.
When the price rejects to stay within the red zone at the top, it suggests a buy-exit. You could exit short positions when the price breaks above the blue area at the bottom. Furthermore, the nearest Fibo level to your entry can be used to determine the stop-loss position.
Buy Signal
The following could be your checklist for a buy trade:
- When price enters the AutoFib buy zone.
- When a bullish candle closes right above the 23.6% level.
Once these events occur:
- You could open a buy position after you confirm your entry with bullish candlestick patterns.
- You could set your stop loss just below the nearest swing low.
- You could set your take profit at the nearest resistance zone, or you could exit trade when price hits the 76.4% level.
- For good risk management, I would only consider trades with a risk to reward ratio of at least 1:2.
Sell Signal
The following could be your checklist for a sell trade:
- When price enters the AutoFib sell zone.
- When a bearish candle closes right below the 23.6% level.
Once these events occur:
- You could open a sell position after you confirm your entry with bearish candlestick patterns.
- You could set your stop loss just above the nearest swing high.
- You could set your take profit at the nearest support zone, or you could exit trade when price hits the 76.4% level.
- For good risk management, I would only consider trades with a risk to reward ratio of at least 1:2.
Autofib Tradezones Pros & Cons
Pros
- The Autofib Tradezones Indicator helps the trader identify overbought and oversold trading zones on the chart.
- The Fib levels automatically show support and resistance zones which the trader can take advantage of.
Cons
- The Autofib Tradezones Indicator may require additional knowledge of price action to confirm trade signals.
- This indicator may not meet the trader’s expectations in a narrow-ranging market.
Conclusion
The AutoFib TradeZones indicator is a good retracement tool for predicting buy/sell entry and exit levels. It also includes a price channel tool for detecting dynamic support/resistance levels. If you enjoy trading price action and are seeking for a strong price-level indicator, AutoFib TradeZone can be a nice addition to your trading arsenal. However, keep in mind that this indicator may generate false signals sometimes and it does not guarantee profits.
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