My $GBPUSD Levels, And How I Got Them… Hint: Fibonacci.

When drawing Fibonacci retracements it’s important to use significant price action to begin and end your Fib retracement grids. In Fibonacci price theory only significant price actions can reverberate through markets effecting future market price action. Friday’s action in the British Pound is about as significant as it gets. I used that action to get what I think are the most significant short term, and by Fib extension, longer term levels that will come into play if price continues in the same direction (down) for a while.

Here’s how I got the levels:

I drew these as soon as it happened. $GBPUSD’s price has respected these levels since then:

Since price fell short of retracing the whole flash-crash range, this price breakdown out of the base today says the odds got greater that $GBPUSD will test the spike low or flash-crash low of 1.18606 sooner rather than later. In the process of doing this price will respect these levels. When price breaks down below and holds below these levels the odds get even greater for a spike low test. To be clear: a price low or high test is when price goes back to a previous high or low to see if it holds, or ‘test it.’

Where you start and end your Fib retracements matters from a Fib accuracy stand point, and from a Fib extension point; because look what happens when you zoom out on these Fibs:

If you draw these Fib retracements on your charts I hope this helps you make some money!

Disclaimer: trading these levels isn’t an easy thing (this post is for educational purposes only, but…) If you have a good system that these levels can be plugged into these levels can be very useful. Good system or not, forex trading is super risky. It’s not for everyone; you can die doing this shit! No, but really, you can have a heart attack trading forex pairs… Without a good system these levels are useless.