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Chapter 10, Part I. Mysterious Fibonacci. Page 5 of 6

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 15, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

    Aug 28, 2009
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    Commander in Pips:

    Most forex trading software already includes tools for building retracement and extensions, so you will not have to do it manually. Furthermore, you will be able even adjust them, so to choose what levels you want to use and which one you don’t.

    To calculate and draw any level you will need to identify swing high and swing low levels.

    So, we will treat as swing high a candlestick/bar that has at least two lower highs on both sides of itself – from left and from right.

    Swing Low a candlestick/bar that has at least two higher lows on both sides of itself – from left and from right.
    Pipruit: Well, currently it sounds too confusing and sophisticated. Can you show me some picture?​
    Commander in Pips: Yep. Here it is:

    Chart #1 EUR/USD Daily. Retracement


    See, our initial move – AB swing. “A” is swing low and “B” is swing high. Fibonacci retracement levels always stand inside initial AB move, so here they act as support levels. I’ve marked all levels that we’ve talked about.
    Pipruit: Wow, 0.382 level really has supported the market. You’re right, Commander, they work!​
    Commander in Pips: Here you can see also, why is using some levels exceeding 1.0 has no sense. Because if market will show retracement, say equal to 1.0 of AB initial swing – it will totally erase it! So, in fact this will be not just a retracement already. The word “retracement” assumes some pull back inside initial AB move usually to 0.382-0.786 level but not deeper that 1.0. The direction of Retracement move is always opposite to initial AB move.
    Pipruit: So, AB is initial move, and BC looks like a retracement, does it?​
    Commander in Pips: Yes. That’s right.
    Pipruit: Well and how extensions do look like?​
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