I've been playing with a new intraday trading template that uses Fibonacci numbers in a little different way. The goal is to help identify intraday intermediate support and resistance levels and to gauge whether those levels will likely hold or fail. Since 80% of NYSE trades are the product of algorithmic program trading and only 3% are retail trades (you and me, buddy) I'm going way out on a limb here and assume that a significant number of those program trades are based on classic technical indicators such as support/resistance, MA crossovers, RSI, etc., or you can just go to www.programtrading.com and see where the big guys are setting their triggers for the day.
My current study of the fibs kicks in after the first 30 minutes and involves setting the fib range between the high and low pivots of the current price. If the current pivot range gets violated for 15 minutes, then I reset the fib range to correspond to the expanded pivot range.
The fibs are easy to set up on most platforms and typically require only snap and click. The difference here is that I'm not using subjective high/low ranges, but the pivots. . which as stand alone support/resistance levels already provide a high level of confidence for my daytrading targets. It's those intrapivot wiggles that can drive me to distraction and frequently cause me to prematurely exit positions that (in hindsight) were better left intact. Using the fibs between the pivots provides an objective overlay of support/resistance to help better assess the impending moves, and when used in conjunction with the 8/16 MAs and the parabolics helps build my confidence when I pull the trigger.
Who would have guessed that a 13th century mathematician's study of rabbit population expansion would lead to applications in the 21st century algorithmic trading dynamics?