Merging Candlesticks 3Point Chart Patterns and Fibonacci Tools

Can we improve the trading strategies based on candlestick chart patterns, 3-point bar chart patterns, and geometrical Fibonacci trading devices if we combine them? Can Fibonacci trading become even safer and more profitable? These are the key questions we consider in this chapter.

Timing is the most crucial element in trading. It is important to know what to buy, but it is even more important to know when to buy. The candlesticks, 3-point bar chart patterns, and Fibonacci trading tools described in the previous chapters can serve investors as profitable stand-alone trading solutions. All trading signals result from special interpretations of market price patterns. All geometrical Fibonacci trading devices as well as candlestick patterns and 3-point chart patterns are based on the core understanding of investor behavior expressed in peak and valley formations.

Working with our Fibonacci trading tools takes nothing more than swing highs or lows and the Fibonacci ratio (or the ratios from the PHI series). The greatest difficulty for traders is choosing correct swing highs or lows. On weekly price data, we cannot always apply Fibonacci trading tools because there are insufficient valid swings from which to calculate turning points. On daily data, in contrast, we receive enough swing highs and swing lows, but we may get too many signals. The number of trading signals can be even greater for intra-day data.

Using the Fibonacci tools in combination with candlesticks and 3-point chart patterns will not assure that we never suffer losing trades, but we can expect the majority of trades to be profitable as long as we apply the tools correctly.

Using our trading devices requires patience and discipline as well as computer skills because our WINPHI software package is essential for applying the tools. The User Manual in the Appendix instructs readers in operating the computer program.

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