How NOT to use Fibonacci retracements

  1. Do NOT apply Fibonacci retracements in a lower time frame without knowing what the trend in the higher time frame is. Instead, start with the bigger trend and draw the Fibonacci retracements in way that you benefit from the direction of the prevailing trend.
  2. The lower the time frame, the less meaningful the application of Fibonacci retracements. The slightest intraday move will throw your short-term Fibonacci support/resistance levels out of the window. Looking at the small picture, any meaningless spike will look like a “new high”.
  3. Do NOT make your chart too messy. This happens when you add too many indicators and lines on it, something that I have seen too often happen with so called short-term traders.