How do you know when the price will move impulsively or correctively? And more importantly, when can traders know when they can aim for a larger win?
Most traders do not have an answer. They get scared by both impulsive and corrective price movements. They might close their winning setups too soon because an impulse just started… Or they might close their trade too late after the correction already has occurred.
The ecs.WIZZ indicator, which is based on Fibonacci sequence levels, solves this for us. Here are some of the advantages for traders (more in the next part):
The benefits of the Wizz concept and tool are of immense value to our trading because of these following reasons:
All of these Wizz benefits are key concepts in trading but very few explain how to implement this on real charts. Especially letting the winners run and cutting losses short is often cited as the main goal for traders but most educators fail to explain how this can be done from a practical point of view. They only loosely refer to the concept without going into specifics and practical examples how traders can actually follow the advice.
The ecs.WIZZ indicator is a powerful concept and tool for letting winners run but also knowing when to expect choppiness and corrective price action.
Pretty impressive right?
Before we dive into how Wizz manages to do all that, let me explain that the ecs.WIZZ concept and tool was created by me, Chris Svorcik, and developed and improved by both Mislav Nikolic and myself. Mislav has helped to substantially improve and automate the tool.
The ecs.WIZZ concept is based on how far price can reach certain Fibonacci sequence levels without returning back to the 144 ema close.
So simply said, the ecs.WIZZ tool is based on the Fibonacci sequence levels plotted on the charts in pip value.
Most traders use Fibonacci levels, ratios, extensions, and targets to some degree. The Wizz tool, however, uses the sequence levels themselves for counting price movement, rather than the ratios.
The ecs.WIZZ indicator is focused on currency pairs and MT4 because the Fibonacci sequence levels are measured in pips – but the principle can be applied to any chart and time frame.
Here is a simplified version of how the idea works:
Whether price is considered to be close, some distance, or far from the 144 ema fully depends on the Fibonacci sequence levels.
It is a simple concept that all traders can do manually without any external help… BUT it takes time to calculate… And it is more vulnerable to errors.
Our ecs.WIZZ indicator does help automate the entire process because it automatically plots the levels from the valid and current 144 ema close.
Before we explain the exact details of the ecs.WIZZ idea and what the indicator does, we need to explain the logic of the idea.
The theory behind the concept itself is simple:
You can compare the price to a tennis ball for instance. The more speed the ball has, the further up it can go up before gravity eventually pulls the ball back down to earth. If the ball has a low speed, then gravity will kick in quicker.
Price is the same as a tennis ball. Speed is equal to momentum and gravity is the same as the 144 MA. But how do you measure whether price has enough momentum to pull away from gravity (the 144 ema close)?
This is the key question. And the answer is based on Fibonacci sequence levels and how far the price can move away from the 144 ema.
The Fib sequence counting from the 144 ema is a concept that we call ecs.WIZZ.
Now let’s dive into the details… First of all, which Fibonacci sequence (WIZZ) levels are used?
This depends on the time frame but these numbers are used for anything below the daily chart:
The below numbers are used if price breaks away from Wizz level 9 (above Wizz 9 in uptrend and below Wizz 9 in downtrend) when looking at time frames below the daily chart:
Here is an overview of the levels and how they vary per time frame:
|Wizz / time frames||Below daily||Below daily|
|Wizz 1||13 pips||55 pips||89 pips||144 pips|
|Wizz 2||21 pips||89 pips||144 pips||233 pips|
|Wizz 3||34 pips||144 pips||233 pips||377 pips|
|Wizz 4||55 pips||233 pips||370 pips||610 pips|
|Wizz 5||89 pips||370 pips||610 pips||987 pips|
|Wizz 6||144 pips||610 pips||987 pips||1597 pips|
|Wizz 7||233 pips||987 pips||1597 pips||2584 pips|
|Wizz 8||377 pips||1597 pips||2584 pips||4181 pips|
|Wizz 9||610 pips||2584 pips||4181 pips||6765 pips|
Why are the levels different for lower and higher time frames?
Because a smaller price movement has more effect on a 15 minute chart. Price needs to move less distance on a 15 minute chart before it hits a critical level because price action is relative. A 34 pip move on a 15 minute chart is a decent price movement but not for a 4 hour chart.
The same principle is valid for the 4 hour and daily charts. A 144 pip movement is critical for the H1 chart but not for the daily. For higher time frames, price needs to move 233 pips (daily) and 377 pips (weekly) before there is sufficient speed to escape gravity (the 144 ema).
The more price moves away from the 144 ema, the more likely it will be able to hit larger Fibonacci sequence levels (Wizz).
Now the main question is: how can you interpret those Wizz levels?
Most important is that when price is able to break above Wizz level 3, then usually price has enough speed to move away from the 144 MA (gravity).
If it stays within Wizz level 3, then the speed is usually low and price often retraces back to the 144 ema (due to the gravitational forces that pull the price back to the mean or average).
So where is the wide open space on the chart? Where could you expect the price to move fast and quickly to the target(s)?
The key zone (for 1 hour charts) is between Wizz level 3 and 6-8. This is where traders can expect quick price action, which is why we call it “wide open space”.
When the price is in this area, It is beneficial to keep the trade open and aim for higher targets or use a loose trail stop loss on average. Why? Simply because there is a high chance that the price will move far and quickly.
Then again, we are more careful in other price areas or phases here we will aim for closer targets because the price is either in a corrective mode or is overstretching itself within the trend. We can’t overemphasize the importance of this information for our trading decisions.
The standard levels are valid for pairs such as the EUR/USD, USD/JPY and AUD/USD, but for fast (volatile) moving pairs, the levels need to be adjusted.
Volatile currency pairs include the GBP/JPY, GBP/AUD, GBP/NZD, and GBP/USD. We recommend using the same Fibonacci sequence levels for these pairs but keep in mind that the pairs are able to push to higher Wizz levels on average.
This is how you can calculate which Wizz level price has been reached.
The good news is that you can use our ecs.WIZZ indicator to do this automatically. The advantage of using the most current version of the ecs.WIZZ indicator is that traders only need to add the indicator to the MT4 chart and the Wizz levels will be added automatically.
No manual work at all and the ecs.WIZZ indicator does all the work error free as well. Once the Wizz indicator is attached to the MT4 charts, it shows the Fibonacci sequence levels that are plotted from the 144 MA:
If you are using the concept on other platforms (besides MT4) or if you are using an older version of ecs.WIZZ, there are a couple of points that you can use for starting with the Wizz levels of placing the Wizz indicator:
Mislav Nikolic likes to use more precise rules for placing the Wizz tool around the 144 ema:
The standard idea behind ecs.WIZZ is to use the 144 ema close.
Generally speaking the Wizz base and starting point is only moved or changed when price hits the 144 ema close. In other words, each time candle hits that ema 144 close, base of wizz is restarted.
But Mislav Nikolic made an improvement after he noticed that there should be an exception once price gets close to the 144 ema after a certain period of time.
The value of using Wizz is for understanding where traders can find the open space on the chart and when they can expect impulsive and corrective price action. But ecs.WIZZ levels can also simply be used as targets. Keep in mind that they are best used in confluence with other tools and indicators rather than as a stand alone concept.
Here is how traders can use the Wizz levels:
The standard idea behind ecs.WIZZ is to use the 144 ema close but traders can also use the top or bottoms for additional targets. They need to use an older version of ecs.WIZZ where traders need to click on the spot where they want the Wizz tool to start.
Traders could also use the tops or bottoms for reversal or retracement targets:
Although traders can efficiently use this concept without any tool or external help, the ecs.WIZZ indicator and Wizz Expert Advisor help reduce any errors by simplifying the process. They make it a lot easier to immediately see all the correct levels and it’s much faster to remove and add a new set of levels.
As mentioned before, the ecs.WIZZ indicator automatically plots the levels based on the 144 ema close. The ecs.WIZZ EA is manually placed on the desired spot of the chart together with the desired direction (up or down). The advantage of having two Wizz tools is that it can be useful for pinpointing extra confluence.
To summarize: our analysis of the market structure is incomplete without using Wizz because it immediately informs us of so much information such as
Most people advertise their system when it works best. A trending system will work well in a trend but how will it handle a range? Usually real trouble occurs when a trending system faces a corrective market. Wizz shows how to detect and avoid this.
For more information, free analysis, webinars, videos, tools, systems, and methods for trading stocks, cryptos, Forex and options, please check out our website www.EliteCurrenSea.com.
Wish you good trading,