Fibonacci Time Zones - a controversial indicator
[info_block align="right"]The Fibonacci time zone indicator allows you to predict potential price reversal points on the chart.[/info_block]
Indicators based on the Fibonacci Numerical Sequence have long been popular among traders. Today we'll talk about perhaps the most controversial and controversial indicator. Fibonacci time zones.
What is the difference between Fibonacci Time Zones and other indicators?
Like other Fibonacci tools, the time zone indicator is based on a numerical sequence where each successive term is the sum of the previous two: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, etc.
The main difference between time zones and other Fibonacci indicators is that they are based not on price movements, but on periods of time. It is this approach that still causes disputes and ambiguous attitude of traders.
Fibonacci time zones on the chart in MT4
Fibonacci time zones are a standard indicator of the MetaTrader 4 platform. To build them, go to the "Insert" - "Fibonacci" - "Time Zones" tab.
After that, it is necessary to select the initial time period on the chart. As a rule, these are the minimums and maximums of the price. In this respect the construction of time zones is similar to the construction of Fibonacci levels.
Based on the selected time interval, the indicator automatically marks the numbered time zones on the chart with vertical lines. As the sequence of numbers continues, the distance between the lines increases.
Fibonacci Time Zone Trading Signals
The Fibonacci Time Zones Indicator allows you to predict potential price reversal points on the chart. Simply put, next to the line marking the time zone, there is a high probability of price fluctuations or its Turning. In this case, it should be understood that if the price near the line remains stable, then most likely, the trend will continue.
A very effective method of clustering is when several time zone indicators are plotted on the chart. In this case, a cluster of lines is a reference point for potential pivot points.
Features of the indicator
Fibonacci time zones have a number of features that must be taken into account in trading.
The first time intervals formed by the beginning of the numerical sequence are quite narrow, so the practices recommend skipping the first 5-7 time zones.
According to the classical approach, the potential temporal reversal zones begin with the eighth zone:
- Zone 8: 21 candles or bar;
- Zone 9: 34 candles;
- Zone 10: 55 candles;
- Zone 11: 89 candles;
- Zone 12: 144 candles;
- Zone 13: 233 candles.
The next feature is that the Fibonacci time zones Effective on charts from daily and older. Of course, no one forbids their use on other timeframesBut it is unlikely that their use, for example on M15 will be justified.
Disadvantages of Fibonacci Time Zones
Naturally, like all indicators, Fibonacci Time Zones have a number of drawbacks.
First of all, it's self indicator construction. Each trader plots Fibonacci indicators in his own way, so even on two identical charts they will be plotted differently. Beginner traders especially "sin" with this. Therefore, if the time zones you built did not give any signals, it is possible that you have chosen the initial time period incorrectly.
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Second, You can't take every indicator line as a potential pivot point. It may as well be a potential trend continuation point.
Third, Fibonacci time zone indicator is not self-sufficient. It cannot be used as a source of trading signals. Its effectiveness will be fully manifested only in combination with other indicators and methods of technical analysis.
To summarize, the Fibonacci Time Zones are a very curious and extraordinary tool, which is definitely worth trying in trading, especially if you use other Fibonacci tools. Whether it becomes an "ATM to get money on" or a completely useless construct for you is up to you.