The Fibonacci Killer indicator uses the Fibonacci levels to alert if the price is near the Fib levels. This guide will talk about how the indicator works and how you can apply it as a strategy.
What is the Fibonacci Killer Indicator?
The Fibonacci Killer uses the Fib levels and indicates if the price is near those levels. The Fibonacci levels comprise the Fibonacci retracement and the Fibonacci extension levels. These levels are based on the Fib numbers. The series adds the value of the previous two numbers like 0, 1, 2, 3, 5, 8, 13, and so on.
The most important levels to watch are 38.2, 50, and 68. If the price is near these levels, you can enter the trade.
Rather than plotting Fib levels, the indicator draws a single line and indicates the nearest Fib level.
Fibonacci Killer Strategy
To trade with the Fibonacci Killer, you must first locate the trend’s direction. To determine the trend’s direction, you must include another indicator, like the Moving Average. You can’t rely solely on the Fibonacci Killer, as it isn’t a trend-following indicator, and you have to find the trend’s direction before reading Fibonacci Killer’s signals.
If the trend is downwards, any time price retraces up, we have a resistance level. These resistance levels are the Fib levels. Whenever the price hits this level, we can enter short positions.
On the other hand, if the trend is upward, we have a support level any time the price moves down. These support levels are the Fib levels, and whenever the price hits the levels, we can enter the long trade.
Fibonacci Killer works on every timeframe, but applying it on longer timeframes is best to reduce market noise.
Buy Signal
- The Fibonacci Killer must be near the Fib level.
- Wait for the price to hit the level and reverse upward.
- You could place a stop-loss near the recent low.
- You could set take-profit at a recent high.
Sell Signal
- The Fibonacci Killer must be near the Fib level.
- Wait for the price to hit the level and reverse downward.
- You could place a stop-loss near the recent high.
- You could set take-profit at a recent low.
Fibonacci Killer Pros & Cons
Like many other indicators, Fibonacci Killer has its pros and cons. Let’s find out if the pros outweigh the cons.
Pros
- The Fibonacci Killer doesn’t clutter the chart with too many Fib levels.
- The indicator alerts you when the price is near the key Fib levels.
- It also signifies support and resistance levels.
Cons
- The indicator doesn’t discuss the trend’s direction, so you must add a trend-following indicator.
- The indicator doesn’t give a lot of info about the Fibonacci levels.
Conclusion
The Fibonacci Killer Indicator applies Fibonacci levels, and the indicator gives an alert whenever the price is near these levels. You can develop a good trading strategy by combining the Fibonacci Indicator with any trend-following indicator and good money management. You can always practice trading on a forex demo account to begin with to improve your trading skills and build up your confidence.
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