If you are already in an open position then that is your stop/limit and new position signal.
It’s useful over any time frame, although the shorter the time frame the more likely you are to get false signals. The daily chart below shows the EUR/USD, you can also see that this strategy works well when price action maintains a trend and not so well when price is moving sideways. The idea is to back test sets of 3 numbers to see which gives the least false signals.
I like to use Fibonacci numbers 13, 21 and 34 on a daily chart, then tweak accordingly.
Posted by zenkick