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Chapter 10, Part VII. Fibonacci Extensions. Page 2

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 16, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Commander in Pips: This sounds logical. Let’s see, where you’ve entered:

    Chart#2 EUR/USD 4-hour chart
    [​IMG]

    You have had a nice entry – in combination of 0.618 Fib support and trend line. But major question now is where to fix profit?

    Pipruit: And where?​

    Commander in Pips: Now let’s remember the ratios for Fib extensions – we’ve studied them in the first part of current chapter.

    Pipruit: Ok, just one second, Sir, I remember – 0.618; 1.0; 1.272; 1.618; 2.0; 2.618.​


    Commander in Pips: Brilliant. Now let’s see how we could apply them here. The major idea here is as follows:

    - During an uptrend we should enter Long from retracement level and take profits at Fibonacci Price extension levels;

    - During downtrend we should enter Short from a retracement level and take profits at Fibonacci Price extension levels.


    To estimate and draw these extension levels you should accomplish three-click procedure:

    In uptrend:

    1. Click on significant swing low. For example, this could be any X point, according to our terminology;

    2. Drag your mouse to significant swing high. It could be an “A” point, for instance, - most recent swing high, but this is not absolutely necessary;

    3. Then drag your mouse to the most recent low, from which recent up move has reestablished – this will be the low of the market that usually stands around deepest retracement level that has held market during retracement.

    (NOTE: In MT4, you must first select Insert, Fibonacci, Expansion.)

    Look at this chart:

    Chart#3 EUR/USD 4-hour chart
    [​IMG]

    See – I use as swing low our initial low, that is also is “X” point, the swing high – our “A” point for swing estimation, as we’ve discussed in advanced comments. “B” point is a low from which up move reestablishes – it stands around deepest retracement level that has held market during retracement. AS you remember this is around 0.618. All markings are according to rules. Bingo – software shows us extension levels – 0.618 at 1.3687, 1.0 at 1.3796, on later chart you’ll see 1.618 also.

    Pipruit: And why are all extension levels except 0.618 above the market during uptrend (and I suppose they will be below the market during down trend)?​
     
    #1 Sive Morten, Dec 16, 2013
    Lasted edited by : Mar 6, 2016
    Hamza Samiullah and fran alvarez like this.
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