Learn To Trade Price Action with Nial Fuller...
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This is a quality article explaining the 50% fib retracement when used in conjunction with a price action reversal conformation, ideally a pin bar setup or fakey bar reversal setup. Remember to Comment Below.
For the record, I am only a fan of trading the 50% retracement off a swing on the daily forex charts, as long as there is a price action signal to confirm its validity I will consider it. My trading is all about confluence and finding evidence to support the price signals on the charts. I may also add that I trade the major currency pairs where this has a higher probability of success, given the major pairs are widely followed and many setups are straight forward and simple.
The process of trading the 50% retracement is simple, below is one example of a recent trade on AUDUSD pair.
1. When you have a price action signal present on the daily chart, you then match up the fib 50% retracement level if there is one present (see chart example below), if the price action candlestick signal matches up with the 50% swing retracement level then your good to go and potentially have a valid trade. If you can also find a relevant horizontal level to match up here, its a double whammy of confluence (a reason to get excited).
2. After finding the potential trade signal, decide to enter at market prices, or wait for a pull back to get your stop loss tighter to reduce overall risk. In the chart example below, given the perfection of the setup, as prices started to move up in the correct directon, a long entry could have been taken, momentum in the correct direction is always a good sign.
3. These setups are rare, but still something to look for in your daily chart time frames. I personally feel that when a trader looks for the price action signal first, then matches up the supporting factors they tend to make better trades. What I am saying here is this… if you see a giant signal on the daily chart, find out what other factors are back it up and showing supportive evidence, we wont always be able to trade a signal, mainly because we prefer not to fight the natural trend of the market, and many times we see signals forming against the trend.
4. The 50% swing retracement line and price action signal both came together at one common point and showed us a nice setup here, but what you should really take away from this example is that it was in line with the general thrust of the market, notice that prior to the pull back, we saw a nice rally up, and the pull back did not exceed the 50% area , rather it rejected it strongly and has now bounced aggressively higher to the new recent highs.
Another nice recent example on AUDJPY
I truly hope this article clears some confusion about Fibonacci levels, personally I only get a handful of these setups every month on the daily charts, but when you see these swing retracements inside general trend movement, its wise to mark them on your charts and then look for some confirmation.
Nial Fuller is considered a leading ‘Authority’ on Price Action Forex trading strategies. If you want to learn more about harnessing the power and simplicity of Price Action Trading Strategies please visit Nial Fuller’s Forex Trading Course & Traders Community Page Here. Nial’s Students get lifetime access to all of his advanced price action Forex Courses, video lessons, webinar tutorials, daily trade setups newsletter, live trade setups discussion forum, traders support line & free ongoing course updates. For more information visit the Forex Course page here.
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Copyright – Learn To Trade The Market Author Nial Fuller
This trade is very well laid and easy to understand. Thank you!
Nial,
Super example…appreciate your continued efforts helping the Forex trading public…
Thanks much.
Dear Nial,
Thanks a lot for this explanation – I had noticed the pin bar on the AUD/JPY that you highlighted on your Trade Setups Blog…I had had the support marked through the 79 region as one area of confluence, but I hadn’t realised that it was a 50% retracement zone as well (a second area of confluence) – I need to pay more attention obviously! 
Very useful tips here Nial and the explanation is crystal! You are helping me to see the markets in such a simple way – Thanks again !
i like this trade setups because it carries a high probability. in addition, i have noticed that such reversals occur after price bangs to round numbers( 50 and 00 endings as in 1.0050 and 1.0000 or quarter numbers( eg 25 and 75 endings as in 1.0025 or 1.0075).
thanks nial for the post because you are one of the few that teach how to trade the right way.
Hello nail
Thank you for all this stof you have the most of the time small text but i tell us much to much thanks for every thing.
And the videos are great .
thanks again.
Greet you ,
Yoenes from the netherlands
Dear Nial,
Hi,
Yes I have got 166pips on AUDJPY with that retrenchment 50%.
it was very nice signal.
What do you think, does this pairs (AudJPY and AUDUSD)get 138.2 level of Fib?
Hope to get such signal in near future.
thanks
Dear Neal, Thank you very much!
I am fascinated by the way price action works. I need a good instructor. I need to have some success in my trading career……………Jim
Great Nial,
This is really good stuff!
DR
Hi Nial
Thanx for this example. Nicely explained. Well done.
Hi Nial
I’m really knuckling down to practicing and trading the way you instruct on the 4H and daily time frames, I going to be moving away from the lower time frames. Less pressure, less time consuming and easy to understand, that’s how trading should be.
Always look forward to your teaching lessons and web updates.
Best regards
Tom
Thanks Nial for showing current examples.Keep them coming, so we can improve our trading.
Larry
Nial:
I enjoyed this tutorial. It was explained clearly and concisely so I can understand it and use going forward.
Well Done
Fantastic Nial. Never thought of just the 50% fib your right a lot of traders look at this on the daily charts.Pretty much center point of the sell and buy zones also.
Nice & simple, price action, Not a reproduction of Jackson Pollocks”Blue poles” painting, Good one, Niall, Thank you:-)
Thanks for this setup Nial. Yes you are right 50% fib is the best setup to use period as the major players always use the 50% fib and out of all the fib numbers has the highest probability of price reacting there. Good to know someone is thinking like the big players.
certainly focuses some credence to this timeframe, one needs to respect it.
Signal with the TREND, Fifty percent retrace, Horizontal Support,PRICE ACTION – Pips Conquered – Thanks for the Advance Course Material – Conquering pips have become secondary to me after I read your course, Now, Whole scope is, Enjoying the trading with STRESS FREE method, Few pure Price action Trades and having more time for my self. Once again Thanks for the Advance course.
thanks for this article about fibs retracement.. It is always easy to make things simple like what you did.. because before i am confused about this retracement levels.. More poweR!!!!
Thanks, this is a powerful strategy. How come I have never noticed it at all? Well done, I deeply grateful for this eye opener strategy
Thank you for price action candles,it is very interesting and now I am practicing it.It is very clear to me.
Thank you
THANKS NAIL ARTICLE! Am really improving in this business industry through the knowledge I get from you.”You are God sent to new traders” Thanks again!.
This is a very special set up for me nial.. i use quite often on big 4 hr candles and look for rite candles with increase vol..
Very well explained.
This is so good.. just had to come back and read again.. It shouldnt be here for free..just got a cracker tday off a 4 hr mther candle..SPOT ON ..fr 75 points.
Hi Nial,
Thanks a lot for sharing this another clear strategy, you’re a great help for us newbies here.
Carlos Pinon
Hey Coach as always you keep showing great potential setup.
I will now start using this one into my trading plan.
Keep the good work mate.
Cheers !
nial, you’re a great guy, i’m just receiving the mail thanks a lot it a nice one.
This is a great looking setup to minimize risk while increasing the probability that the trade will work out! Glad I found you Nial! 
God rewards you for helping others. Nice article as usuals-thanks
Thanks for posting this technique. I hope will let you know how my trading goes..Shane
best to found your wedsite,good strategy for us to use,thanks.
Nial, I have just found your website and cannot wait to get stuck into all this free trading advice you have on your website. I love price action trading and have only recently realised how nice it is to trade without indicators.
Keep up the great work.
Wow! Another arrow in my quiver. I wonder if this is brought out better on the daily chart or does 4 and 1 hour charts display 50% retracements equally so in the handful that occur throughout the month?
great piece….. wud incorporate it to my trading tools.. Thanks a lot
Great, Nial. Thanks a lot.
Great stuff Nial !!
Every article I read has tons of new info.
You are good thank you for making good me too GOD BLESS YOU.
HI Nial
Its a great article and website.
I’ve been reading your articles over and over again just to understand what you’re saying and so that I don’t miss out anything.
For this type of 50% retracement setup, when do you start putting your order? right after the day of pin bar appear?
Thank you for your time.
Hi Lucan, please email me for details on this.
Thanks for this artical.
Hi Nial,
I have been reading our articles they are clear simple & easy to understand. Thanks
Simple, effective & profitable – like it!
Dear Nial,
Your explanations are very refreshing and easy to understand. Your style only reinforces the idea that trading should be kept simple. Thanks again
Hi Nial,
Great combo! pinbar on a 50% or 61% fibo retracement gives me an edge rather than to wait for the next candle to close, thank alot….
Hi thank you for the education I trade retracement too just as you said it’s a good set-up in a month it gives me over n300% profit though I lost half of it the following month because of lack of money management. so thank you this just confirm that the system is good.
Thanks again
Thanks Nial that clears a lot of things up for me.I am a newbie, I forget to do the 50% fib. Great lesson
Respected sir
it boost up my confident.
Thank you sir
Dear Prof, You have given another good angle of elevation to our trading career. thanks again.
Thanks Nial for these lovely simple examples
Mister Nial Fuller, I only just became familiar with your work a couple weeks ago. This past weekend I read this article, and then yesterday three lovely setups appeared on the daily charts at the same time. I took all three and increased my account by over 41 percent. All of my money is off the table for these trades, but it will be interesting to see how much further they go. Thank you so very much!
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T Allen said,
March 9, 2010 @ 12:06 amNial – you always do a good job putting things in a nutshell. Thanks for this great article.