Fibonacci Clusters. Subtlety of use. Anton Hanzenko.

Fibonacci clusters are a group of standard Fibonacci lines with levels (23.6, 38.2, 50.0, 61.8, 78.6 and 100.0) located in relative proximity to each other so that the lines of individual indicators form сlusters are relative heaps of levels that indicate the possibility of correction in a certain zone. Simply put, the cluster arrangement of Fibonacci lines implies the use of lines on each expressed trend. As a result, on the chart prices at certain levels accumulate lines of different indicators, forming a cluster, which indicates a high level of the extremum formation.

In case of clustered use of Fibonacci lines, the main problem of the Fibonacci line indicator is that it is impossible to know in advance from which level repulsion will occur.

For the construction of Fibonacci cluster lines, it is necessary to determine the global trend and extend the Fibonacci lines on intermediate trends.

The figure above shows an example of clustered use of Fibonacci lines. After the price chart was applied to the first Fibonacci lines (blue and green), two clusters were formed. This is the support zone, from which it was worth expecting the repulsion, which happened. After the formation of the third local maximum, the third Fibonacci lines were laid, which formed the second group of clusters.

For more convenient use of this approach, it is recommended to use the auxiliary indicator ZigZag, with the parameters: 12, 5, 3. The indicator will help to mark the intermediate trend movements, after which the Fibonacci lines will be built.

When using Fibonacci lines, there is a probability that the repulsion will occur from any level. So, with a cluster approach, this probability can be limited to two, three, or even one cluster, level.

Fibonacci clusters can be effectively used on any trading instruments and timeframes without restriction. Also, this approach of using Fibonacci lines reduces the main disadvantage of the indicator – uncertainty, prioritizing the trader’s attention on several important levels. Such an approach will be an excellent addition to strategies that are focused on support and resistance levels.

More details about the Fibonacci cluster lines and much more can be learned at the training courses offered by the Ester Holdings Inc. Read more …

Anton Hanzenko