Market Momentum and MFibs
(Advanced discussion)
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Market Momentum
The market line is Market Momentum (the whole market). For example, check m5 for intraday. Every day you can see a rising line at London Open or on news and its flattening overnight (around NY Close). Simplest rule (M5): if market momentum is below MFib 23, market=flat. Avoid a flat market or use reversal strategies. Above MFib 50 the market=active, use trend strategies. If market momentum is above MFib100 market=volatile. Be cautious. Check history to learn.
Comment 12 https://www.mql5.com/en/blogs/post/697384#comment_5371352
Market Fibonacci reversal zones for currency strength.
Our market Fibonacci lines are dynamic. This allows currency strength to adjust to the ever-changing market. Whereas with other indicators these levels are static and do not change or even exist.
Since ACS28 version 3.6, horizontal lines are no longer used for Market Fibonacci levels (you may find them in old pictures). And the dynamic Market Fibonacci Levels do not need Fib names. Remember the colors, especially the Market Fib 100 is green and the 161/261 is red and magenta.
Trend trading (oGAP) up to 100 MFib
Inner zone is everything up to the green 100 MFib - trend trades.
From +100 to -100 market Fibonacci zones.
I also call it the trend zone. Here we look for trend trades, both directions are allowed, preferred outer directions form zero or 23 MFib oGAPs (it is up to the trader if he decides to wait for a breakout from the 50 MFib.) and we can hold it until we see a hook, still hold it through the empty space between green and pink zone. If we don't have a trade jet and don't enter the empty space, it's too late.
Pullback trade from 161/261 MFib.
Outer zone red 162 and pink 262 MFib - reversal trades.
Higher than +161 and lower than -161 are the Fibonacci reversal zones of the market.
I also call them the reversal zone. Here we never enter in the direction further out (no oGAP), but only as a reversal to the inner iGAP when we see a hook and another iGAP (needs the second currency to form a pair, dGAP with iDir). When a currency has hit the reversal zone, we are allowed to make a reversal trade to the inside in the empty zone. Again, iGAPs must be steeper than oGAPs. If an iGAP is not steeper, it may just be a consolidation or a small pullback until the trend resumes.
I repeat, be aware that an iGAP is still just a pullback until it crosses the zero line. If you trade iGAPs, you must have experience with pullback trading. A verification is a reaction to a supply or demand zone. Easier for beginners are the oGAPs trades.
Be aware that smaller TFs are more volatile than larger ones. Smaller TFs like to hit higher market Fibonacci reversal zones.
Reference:
The Trading Strategy: https://www.mql5.com/en/blogs/post/679077